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 How to avoid major losses in equity investing?

How to avoid major losses in equity investing?

It is quite easy to fall prey to market fluctuations and make unprecedented losses in investment. Wealth building is important for everybody; it is not enough if we have sufficient money today, the future counts as well. Investing in the equity market is perhaps one of the most lucrative ways of going about this. It is a fact that there are several avenues of making money, but investing in equity is considered best among them. Following some simple tips will help you steer clear of losses and maximize your gains over the long run.

-  Never rush into an investment. Always make informed decisions. If you are looking at short term investments (where you want to retrieve your money in less than a  year) then choose debt products (such as debt mutual funds). In this case, the risk is less but so are the returns.

-  If you want higher returns, then choose a long term investment such as the stock market.

-  Beware of fraudulent companies. Not all the “upcoming” companies you come across are genuine.

-  Buying high and selling low are the most commonly made mistakes. Do not Panic; in fact you just need to do the opposite.

-  Do not believe superstitions or word of mouth when it comes to investing.

-  One fundamental rule to remember: never borrow money or take a loan to invest. The surplus you have left after all your expenditures is what you should use for investing instead of splurging it unnecessarily.

-  Stock market is not a game of gambling- it is very much an investment to fulfill your financial goal.

-  Avoid day trading, use your common sense and don’t get too greedy.

-  It is always advisable to seek professional help, provided they are reliable.

-  Go in for a systematic investment plan [SIP] – which help you save regularly and with discipline.

You can definitely control your investments, but you can’t control their performance. Once you understand that, you are well on your way to wealth generation. It isn’t just about increasing the value of your finances, it is also about improving your credit score and credit records so as to be able to avail loans easily and secure your financial future.

No amount of speculation can help you get more gains, it is only a tentative calculation you will have to go by. But, the advantage is that the more patient you are and the longer you invest – you will be rewarded well and be able to achieve all your financial goals.

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Priya Rai is a loan consultant.