Most of the investors entering into share market open a trading account with broker to minimise the risks of taking a wrong investment decision and can help you become a successful investor. Other than knowledge and insights, share trading and investing needs certain habits and mental traits. There is no shortcut to be successful in share market investment. Betting on right shares at right time is the only way to gain profit and to know when the right time is you need to cultivate these habits. No matter how many advisors and experts try to sell you their ideas, remember there is no full proof strategy that will do the trick for you. Investors must take long-term view on equity markets, identify good stocks and stick to it until it manifests the expected result. Although there are certain rules and words of wisdom that can help you attain expected results on practicing them for a long time.
Here are a few habits that will help you gain profit in share market investment.
- Choose long term investment and stick to it – You must have heard from many that the first quality to incorporate as a share market investor is patience. And to be patient you need a long-term plan to stick around for a long time. You need to be consistent and disciplined to adhere to the plan you chose.
- Spread your risks for risk managements–There are famous investorswho made massive profits out of handful stocks. If you are still wondering how they did this, the trick is to spread your risks effectively. You can’t control returns on your investment, but risks can be controlled at your end if you focus on risk-adjusted returns. Risk diversification is one of the key factors to be successful in stock marketing.
- Manage costs and executions smartly – Investors usually make a mistake of thinking that cost and execution matter only to the traders. Whereas every investor must make a habit of managing costs and executions. Your aim must be to get best execution and lowest rate, this will help you to get more value for your investments. Over a longer time period, focusing on costs and executions can show significant return on investments.
- Focus on post-taxreturns – As a smart investor you must focus on post-tax returns. For this you need to play the short term capital gain (STCG) versus long term capital gain (LTCG) game very carefully. Make a note to farm losses as and when possible to reduce tax outflow. You must also take in consideration factors like buyback tax, dividend distribution tax (DDT), etc. while making an investment decision. Taxes can affect the net tax return in a particular manner.
- Follow share market news–If you aspire to gain massive profit in stock market, you must spend adequate time in doing research on company and related factors like the industry and technical related to the company. The more excessive is your research the more will be your chances of making the right investing decisions. Hence, getting into the detail remains the golden rule to make profit in stock market. One of the best ways to research and stay updated about the stock market happenings is to make a habit of following share market news. There is no particular pattern in share market although following the news regularly will help you guess the what can happen next and thus invest mindfully.
- Focus less on stock price and more on business–Remember charts and price levels are only secondary concerns while the main focus should be business. Make sure that your business is adding value to its shareholders because that is what will bring big investments at the end of the day.
Try to stick to these rules and make a habit to follow them and see the difference in your decisions regarding stock investments.