Market Masterclass | Pranjal Kamra’s 9 tips for stock market beginners

• Follow

Has the current stock market action left you captivated and interested to start investing in stock markets? If you are a first-time stock market investor or want to join the bandwagon, we have a list of 9 fascinating tips from Pranjal Kamra, CEO of Finology Ventures and a YouTuber.

Kamra recently gave an interview to Money9 where he shared some expert tips for first-time investors inclined towards putting their money into the stock markets. The business of investing in stocks can be confusing to a beginner as the internet is flooded with series of advises that provide little understanding of the basic idea of stock market investments.

However, the Finology founder gave some easy-to-understand and apply tips that you can go through to avoid at least the most common mistakes beginners often commit. Let’s give you a quick round-up of the 9 tips suggest by Pranjal Kamra.

1. Think long-term 

Don’t mistake stock markets for rapid money-making machines. Stock market returns often come in chunks but not necessarily at an advanced pace. You may stay invested for as long as  3 to 5 years and markets may go nowhere as per your plans. Just because the recent history of stock markets has been good, don’t enter this realm with an impression that it’s the ultimate tool to quick wealth generation.

2. Avoid herd mentality

There is a tendency of most of the investors, especially retail, to over-allocate to the flavour of the season. Whenever any sector or a stock starts buzzing, it becomes the most talked about commodity in the pink papers, TV Channels as well as social and digital media where one is bombarded with the virtues of getting invested in that story. Don’t follow this herding bias. Always invest as per your financial goals and capabilities. Think from your experience and be as individualistic as possible – whether investments or life, in general.

3. Invest in what you know

Stocks are extremely volatile. The prices keep rising and falling every minute. To avoid any panic, prefer investing in stocks that you know enough about. You can only differentiate between a temporary and a permanent problem only when you know the company inside out. It will help you assess the situation better and prevent any action taken out of pure fear of losing money.

4. Don’t try to time the market

The honest truth about stock market investing is this – you can buy from the greatest companies but whether the stock will move tomorrow isn’t in your control. So don’t try to time the market. Stay invested for long term and results will come sooner or later.

5. Invest what you can afford to lose 

Do not invest money that is required to fulfill your basic needs. Never cut down on the essential expenditure to start investing. Always invests your surpluses in stock markets. Only the money that will not impact quality of your every day life and you can afford to lose should be set aside for investments.

6. Never take loans to invest in stock markets

Your payout on loans are fixed but returns from stock markets aren’t. Therefore, never take loans to invest in these funds. It can be extremely risky and should be avoided. Investment is a choice, not a compulsion. Thus, don’t compromise on the compulsions to suffice an optional choice.

7. Choose the right platform

Avoid too-good-to-be-true brokerages and investment platforms. Don’t be lured by exceptional promises and stick to the basics. Always choose a Sebi-backed investment platform for credible and transparent investing.

8. Discipline and patience 

It doesn’t matter if you lose one match because there’s a larger goal ahead of you. Don’t be tempted to take any shortcuts. Investing should be practised just like any sports – the key to its success lies in discipline and patience. They work wonders when adhered to consistently.

9. Don’t be emotional

Showing your emotions and being your true human self is important on many occasions in life and can indeed be a great thing. But not when it comes to investing. Being emotional will lead to you making bad decisions that result in costly mistakes. You have to always be aware of the subtle difference between being right and being in the money. You wouldn’t care if you were wrong when you’re laughing all the way to the bank.