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Do you want to start investment in Stock Market? But confused about how and when to start? Then this is a small attempt to help you with starting an investment in stock market as a Beginner.

Today, People are realizing that Stock Market is no more than a gambling place or a mechanism to richness, However, it is also a valid option for an Investment. They are accepting the fact that this investment can give high returns to beat inflation over long term. But what people do not understand is the ‘Risk’ associated with stock market investment.

It is very important to understand this risk factor and how you can manage it. Risk in stock market investing increases when you:-

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• Invest without understanding market cycles
• Invest for short term with view to earn profit
• Pick and invest in random stocks to get quick returns
• Invest without any specific goal
• Invest by following stock tips blindly without doing any research
• Invest all your money in any specific sector or a stock without diversifying

Like all other investments stock market investing also needs time to grow and give returns. There are a few important factors one need to consider before starting investment in stock market. These factors are:

Risk capacity:

Accessing risk capacity is nothing but to find out how much you are comfortable with market swings. In simple words, how much you can afford to lose. This will help you to take calculated risk as per your risk level.

Age:

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This can impact positively or negatively to the risk capacity of an individual. For example, at young age you can have more time on your side and therefore, you can take high risk. It is always good to start early.

Goals:

Before starting investment, ask yourself these questions:- ‘why are you investing in the stock market?’  what’s your goal ? How long you want to invest?

If you do not have any specific purpose of investing or if you are likely to withdraw your investment in short term, then it’s better not to invest in stock market. Investing without a proper goal is like traveling without any destination. Stock market investment is more beneficial when you invest for long term goal.

Knowledge:

Knowledge gives you power to understand what is correct and what is wrong. Learning about Stock Market Basics can help you take right decision and to make better choices.In investing, once you start getting more knowledge, you are more likely to understand the risk associated with it and learn how to manage it.

Research & Homework:

Doing your own research and learning Stock Market Techniques before buying any stock can boost your confidence and can save you from picking stocks which are not suitable to your requirements.  As a beginner, investing in blue-chip stocks usually a safe bet but then you may have to pay more to buy such shares. If you want to invest in any mid-cap or any other stocks then analyzing and researching it is always recommended. It’s not very hard task, you can go through company’s balance sheet, annual reports etc. to find out its financial position, its future plans, debts, assets etc.

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Diversify:

Diversifying portfolio as per your age, goal etc. is another important factor. Investing in different companies across different sectors can help you diversify and reduce risk. Remember, investing is not only about earning high returns but is also about reducing chances of loss.

Market Timing:

Many people wait for perfect timing to enter (& exit) in the market. But there is no such perfect time. Market is unpredictable and therefore, timing the market is like wasting valuable time. Starting early is important than waiting for a perfect timing.

Stock market investments historically proved to deliver high returns above all other types of investments. It also provides advantages like liquidity, regulated market, clear visibility to investors. Stock market provides an opportunity to build wealth over long term and all you need as an investor is disciplined investment, patience and longer time horizon. Take into consideration above points before investing in stock market.  Monitor your stocks/portfolio on regular basis to check whether it is align to your goal, risk capacity and other financial requirements.