How to earn money from the Share Market
In this money-making world, where everybody aims at earning more and more and focus on various sources from where can an individual earn more. It is very important to know where to invest and vice versa.
Here, we will learn about how an individual can earn money by making investing or trading in the share market. An individual can make a lot of money in stock market by making wise choice. They must also keep in mind to choose a stock broker wisely.
One must follow some basic principles to earn more profits in the Share Market. The foremost point to keep in mind while planning to earn more from share market is that one should have an excellent risk-taking ability. Investing in equity are risky, and one can quickly lose the money if he invests in the wrong stock. Thus, investing in equity market is advisable to only those who can bear the risks involved in share market.
An equity investor must be aware of the principle that is he must know which stock to be picked up and when to exit. For example: Infosys Technologies, TCS, Eicher motors, Relaxo Footwear, Avnti Feeds are some stocks that have turned their investors to millionaires in 10-15 years.
An individual needs to be a financial wizard to pick the accurate stock, basic financial statement reading and some sort of common sense that can lead an unindividual to a potential multi-bagger.
Here, below are some Do’s and Don’ts that a trader must do before he plans to earn through investing in Share Market.
Do’s
1. Select the companies that has consistent revenue growth. In case of new firms, an individual must look for the firms that earns high potential revenue growth and has more free cash flow.
2. The distribution of the revenue of a company must be distributed and not concentrated from the few accounts.
3. You must have wise eye to identify the companies that has sufficient free cash flow and is able to raise the fresh capital earned. One must avoid the firms with the leveraged balance sheets and huge debt.
4. One must pick the leaders in the business that have major barriers to enter in the market. In case, the company is new then go on identifying the company that has a differentiated product and are focuses on innovation.
5. Do not choose the companies that are highly dependent on the government for their revenue.
6. Focus on selecting the companies that have a simple business model and can only make investment in the business that are simple to understand you.
Don’ts
1. Avoid buying a stock just because of its popularity that is gained from the media because it is usually paid.
2. Never follow any celebrity investor just because their risk involved and the return profile is different than an average investor.
3. Avoid changing your investment thesis on the stock that is based on the few bad quarters.
4. Never choose to stick to a stock if the fundamental of the company have materially deteriorated. You must always know when to exit with the stock. Knowing when to sell the stock is the difficult part of investing.
5. The existing price of the stock are fully backed up by the business growth. It means that the stocks have become overvalued.
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