How to Invest in Share Market

Investing in Share Market

1.  Establishing Your Goals and Expectations
2. Making Your Investments
3. Monitoring and Maintaining Your Portfolio

1)      Establishing Your Goals and Expectations

• Make a list of things you want.

To set your goals, you’ll need to have an idea of what things or experiences you want to have in your life that require money. For example, what lifestyle do you want to have once you retire? Do you enjoy traveling, nice cars, or fine dining? Do you have only modest needs? Use this list to help you set your goals in the next step.

• Set your financial goals. 

In order to structure an investment plan, you must first understand why you are investing. In other words, where would you like to be financially, and how much do you have to invest to get there? Your goals should be as specific as possible, so that you have the best idea of what you’ll need to do to achieve them.

• Determine your risk tolerance.

 Acting against your need for returns is the risk required to earn them. Your risk tolerance is a function of two variables: your ability to take risks and your willingness to do so.

• Learn about the market.

Spend as much time as you can reading about the stock market and the larger economy. Listen to the insights and predictions of experts to develop a sense of the state of the economy and what types of stocks are performing well. There are several classic investment books that will give you a good start.

2)      Making Your Investments

• Determine your asset allocations

In other words, determine how much of your money you will put in which types of investments.

a)       Decide how much money will be invested in stocks, how much in bonds, how much in more aggressive alternatives and how much you will hold as cash and cash equivalents (certificates of deposit, Treasury bills, etc.)

b)       The goal here is to determine a starting point based on your market expectations and risk tolerance.

• Select your investments

Your "risk and return" objectives will eliminate some of the vast number of options. As an investor, you can choose to purchase stock from individual companies, such as Apple or McDonalds. This is the most basic type of investing. A bottom-up approach occurs when you buy and sell each stock independently based on your projections of their future prices and dividends. 

• Determine the intrinsic value and the right price to pay for each stock you are interested in.

Intrinsic value is how much a stock is worth, which can be different from the current stock price. The right price to pay is generally a fraction of the intrinsic value, to allow a margin of safety (MOS). MOS may range from 20% to 60% depending on the degree of uncertainty in your intrinsic value estimate.

• Purchase your stock

Once you've decided which stocks to buy, it is time topurchase your stocks. Find a brokerage firm that meets your needs and place your orders.

• Invest regularly and systematically

Dollar cost averaging forces you to buy low and sell high and is a simple, sound strategy. Set aside a percentage of each paycheck to buy stocks.

3)      Monitoring and Maintaining Your Portfolio

• Establish benchmarks

It is important to establish appropriate benchmarks in order to measure the performance of your stocks, as compared to your expectations. Develop standards for how much growth you require of each specific investment in order to consider it worth keeping.

• Compare performance to expectations

You must compare the performance of each investment to the expectations you established for it in order to determine its worth. This goes for assessing your other asset allocation decisions as well.

• Be vigilant and update your expectations

Once you have purchased stock, you must periodically monitor the performance of your investments.

• Guard against the temptation to trade excessively

After all, you are an investor, not a speculator. In addition, every time you take a profit, you incur capital-gains taxes. Besides, every trade comes with a broker's fee.

• Consult a reputable broker, banker, or investment adviser if you need to

Never stop learning, and continue to read as many books and articles as possible written by experts who have successfully invested in the types of markets in which you have an interest. You will also want to read articles helping you with the emotional and psychological aspects of investing, to help you deal with the ups and downs of participating in the stock market. It is important for you to know how to make the smartest choices possible when investing in stocks, and even when you do make wise decisions you should be prepared to deal with losses in the event that they occur.

Money CapitalHeight provides two days Free Share Market Trading Tips to check our accuracy level. We are committed for High Level Accuracy in our call but customer satisfaction is much important for us. So firstly visit to us and take Free Trial, after then it is your decision to choose our services.