Top 5 precautions taken before investing in stock market

If you are also thinking of investing in stock market, then you should be aware of the precautions taken before investing in the stock market. In the last two years, the market has fallen worldwide due to Corona and other reasons, but the number of people investing in it has increased.

Because of the lockdown, the people’s exit from the house was reduced, and people began looking for new ways to earn.

investing in stock

The share market became the people’s focus as they realized that money could be earned in less time sitting at home.

In a hurry to earn more money, people have lost their money by making some mistakes.

To prevent this from happening, I would like to tell you what precautions should be taken before investing in stock market.

diversified portfolio

1 – The first lesson is that never all your investments should be in the shares of a single company.

Research shows that the more diversified your portfolio is, the less risky it will be; it does not mean you should blindly buy shares of different companies.

investing in stock market

Let me explain this to you through an example; suppose that you have 10 lakh rupees for investment; if you put all the money in one company and the stock of that company falls, you will suffer a huge loss.

But if you invest one lakh rupees each in 10 different companies and even if the shares of one or two companies fall, then that loss will be compensated through other companies.

In this way, you will avoid overall loss.

penny stock

2 – The second lesson investing in stock market is that you should avoid buying very cheap stocks whose price is less than Rs.10.

People who start in the share market think that if they buy cheap shares, they will be able to make more profit, but it rarely happens.

Most penny stocks are scams, and investing heavily in them is risky.

Do not make the main source of income

3- As I told you at the beginning of this article, most people join the stock market due to the greed of earning more and trying to make it the main source of income.

But if you do this, then it will be the worst decision.

Never make it your main source of income.

Don’t ignore the risk

4 – The fourth lesson is that there is risk in investing in stock market, and you should be aware of this before investing.

My motive behind saying this is that you must learn risk management before starting the share market.

Unless you accept the risk, you will not take the measures to avoid it.

You can also understand that you ride a bike and wear a helmet, and the other bike rider who is not wearing a helmet is more likely to get seriously injured.

According to a statistic, every year, helmets save millions of lives.

Unless someone realizes danger here, he will not adopt any means of rescue.

learn more : how to buy shares in india for beginners

In the same way, it happens in the share market because they get information from YouTube or another social media that someone has made millions of dollars in one day.

But no one shows how many people have lost money, so considering the risk, invest only as much money as you can bear the loss.

Do proper research

5 – What precautions should one take before investing in stock market? The last and most important piece of advice on this topic is to research the company before investing.

In research, you have to see the company’s management, what its product is, and what its use will be in the future.

You also have to pay attention to these types of things when thinking of investing in stock market.

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