Stock Market Investing is the art of wealth creation by understanding the fundamentals of various markets – regionally and globally. Success in the stock market is within the reach if one is a little bit careful and shows some patience. Successful stock market investing should not be equated with get-rich-quick schemes. It is not the place for speculation and gambling.
Three basic factors, viz selection, timing and price, involve in stock investment. Selection of right stock at right time and right price is important. An investor can assume buy-and-hold strategy which provides him/her with right time and price for selling option. Success on the stock market will therefore hinge on your ability to take the right decisions with respect to selection, timing and price. However, one has to decide the amount of initial investment, the period over which the money is invested, the rate at which the invested capital appreciates in value, and the income you receive from your invested capital during this period.
If you are a new investor in share market it is better to avoid hot penny stocks during your “learning period”. Even though the penny stocks are unique in the investment realm they can end up in spectacular crashes also. Therefore a beginner should opt for stocks that are fundamentally strong. Let the experts deal with the “hot penny stocks”.
Notwithstanding, successful stock market investing goes far beyond selection, timing and price. It involves the setting of personal investment objectives, formulating an investment plan and adopting a suitable investment strategy. While investing in stock market one should consider safety and acceptable risk levels. One should not go behind insufficient information, incomplete or illogical analysis, readymade “tips” or blind dependence on luck. Understanding the “fundamentals” of the company is necessary for a successful investment.
Unlike shares, bonds are a form of indebtedness that is sold to the public in set increments. They come under “fixed-income” investments and have minimum exposure to risks. However, returns from the bonds are limited and pre-determined as compared to the shares. Due to this reason risk in bond investing is almost none as compared to the shares. However, in bond investing diversification would be the best strategy.