But it won't happen out of the blue. To become a successful equity investor, you have to first prepare and extensively train yourself.
Four qualities are essential to get many more hits than misses with your stocks.
First, you should have very good knowledge about the companies, the economy and the working of the markets. You should have the skills and experience to understand and analyze balance sheets. This is very important so that you can rightly identify what stocks to buy, when to buy and when to sell. Even if you depend on brokers, friends, etc. for tips, it is always a good idea to recheck their recommendations before committing your money. Unfortunately, most people rarely do their homework. And this becomes the primary reason for most people not getting the best out of the equity markets.
Second, you must keep yourself fully updated and monitor your portfolio regularly. If you don’t do so, there are good chances that you may fail to spot new and exciting opportunities. Also, you could miss getting out in time, should there be any adverse developments in respect of any of your investments.
Third, you should have sufficient money to build a well-diversified and balanced portfolio. Not all stocks would be winners. But a few gems would be enough to make massive money for you. And for that you need a decent-sized portfolio.
And last but not the least you should have the right psychological temperament to handle the markets. Equity markets can be extremely tricky and volatile. Even the best of the experts will not find is easy to handle them. Give everyone the same set of stocks to manage. And yet, no two people will generate the same returns. Some will be exceptionally good and some dismally bad at it.
As you will appreciate, the chances of success at stock exchanges are extremely poor for a person not matching up to the aforesaid standards. And it would be unwise to take chances where the odds of winning are very low.
However, do not lose heart if you fail to match the above criteria. You can still participate in the equity markets through professionally managed funds such as the Mutual Funds.
More often than not, this would be the most suitable and sensible alternative for most of you. Many of you do not have the right expertise to buy / sell correctly; are too busy to devote any reasonable time for research and review; and do not have sufficient surplus money to have a good portfolio. As such, stick to the Mutual Funds.
In short, don’t be too adventurous with your money. No point in unnecessarily losing it... and all of it!
