For all the techies who are interested in entering Stock Market.
Following are my suggestions.
Before entering stock market, try to play games which simulate Stock market. This will be a very good platform to learn. I am sure you will have a good time playing the game and also learn a lot from it. I always felt that it is better to start any learning process by playing as a game, it provides so much fun and also it helps us in learning the concepts. I started the wrong way, before getting thorough information about Stock market, I jumped into it and incurred losses. This was because I was not prepared for it. I was in a hurry to make money in Stock Market. I realized it is not as easy as it seemed to me once. I learnt the hard way.
To play simulated stock market, I suggest you to play at http://moneybhai.moneycontrol.com/. This is quite interesting, I am sure you will learn many concepts of investing over here. I personally like this site. This replicates the BSE and NSE.
Baby Steps towards investing in Stock Market!!
As everyone I was scared to get into the Stock Market. All that my dad said was, don’t get into stock market and lose your money. My friends said be careful buddy, it is a bad world out there. My first step towards the stock market was very important to me. I overcame the fear and was careful.
I would advice a newbie to make sure that he has the following qualities before he/she gets into stock market. One is fear and other is greed. Both are the most common qualities I came across in the Stock market. I was scared and was greedy. Hence you can’t just claim that you dont have these qualities. I had to struggle and lose money to realize that I had these qualities. Be prepared before you make your move.
The first step would be definitely overcoming the fear of losing money. When we start learning to drive our bicycle we fall. I am sure there is not a single soul on earth who has not fallen once while learning to drive bicycle (Are you an exception eh??). This is true with Stock market also. While learning we may or may not mistakes. I feel stock market works on Randomness. There is no theory which can guarantee you 100% returns on your investments. I was following nearly 8 news channels before investing on stocks and got to know that all 8 news channels are just waste. My opinion is Common sense and good judging capacity should be more than enough to make money in the Stock market. My first suggestion don’t bother about zillion things to buy a share. It is not worth it. It simply does not work that way. I am no financial expert but I too have tasted the success and failure in the stock market.
Next step would be not to be GREEDY.. I know everyone who is reading will be now thinking I don’t fall into that category and hence I need not worry about it. Whoever thought so right at this moment, am sure you are very greedy.. Take my word. I was of the opinion that I am not at all greedy. When I entered Stock market, I planned and all that, but my greed overpowered all my emotions and my thinking. I realized I am greedy. To realize this I lost money. Try it and then you will think I am right. I am sure that most of them will think I am just bluffing around, but what I said is Truth!
Now plan your investment strategy. I have a very clear path to investment strategy. My intension is I should get minimum of double the interest rate that bank pays on savings account (assumption bank pays 10% PA) i.e. atleast 20% returns on the investment. And for heaven sake don’t invest for tax reasons. If that is your intension, please don’t invest in stocks. Since you don’t get any tax breaks (I am sure everyone knows that!!). I hate when people invest for the purpose of saving tax. I feel that is not a good idea at all. I know most of us do that, but honestly I don’t think it is a good strategy. I know it is very hard to plan up the investment strategy. I would suggest you to start it, plan first for short term strategy. I define Short term to be anywhere between a month to six months (1 – 6). It is just for our convenience. Have a plan in short.
Next Step, when to exit? I always feel that investing in stock market is more or less like a game. ( I love playing too much, I love the risk and the stakes that Stock market offers. I know I can’t keep playing the game all day and night. So I have to stop playing some time. ) Why I suggest this is cause it is not a good idea to keep invested your money in Stock market. Since we have planned to enter the stock market, we should also plan to exit it. I generally exit after my purpose is achieved i.e. I get 20 % returns on my investment as per my strategy.
I am sure that you guys are very scared to lose money since that is what you have heard from your colleagues and neighbors and well wishers. I say you will make money so don’t be scared. Make your move. Have a positive attitude towards life. You never know what happens in the world of Stock Market, it is just Random. No one can predict exactly what will happen tomorrow. Cause if he is so sure of the behavior of the market I bet he would have invested crores to make 100’s of crores.
So please make an attempt to invest and don’t be scared.
Engineer's Finance 