Many people are becoming millionaires or billionaires by investing in the stock market.
In fact, the stock market is one of the best ways to accumulate wealth and become rich.
Not the quick way, but the slow way, of course!
These people did not become wealthy overnight.
They worked hard for it and do their homework well before they started to invest money in the stock market business.
Based on the advice of successful and big players in the stock market business, there are a few things that you must follow if you also want to accumulate wealth that will set you to attain financial freedom in the future.
These rules are not like a ‘100% Guarantee’ kind of rules, however, if you follow these rules well, your chances of getting successful in the stock market business are much higher than those who just invest their money for the sake of earning money without doing some research nor they have any strategy.
These people are also the ones who go into loss and they were not able to hold their investments for the longer term.
In fact, according to market research, 90% of investors and traders lose money in the stock market. This is a shocking revelation.
The reason why they lose money is that they didn’t take the time to understand and learn the important strategies for investing.
If you want to be a successful investor you need to have a strategy and follow certain rules.
Important Rules For Investing In The Stock Market
1. Focus On Learning
Warren Buffett once said, “The more you learn, the more you earn.”
Many people did not take the time to learn even the basic knowledge and started to invest all their money and lose everything.
The best place where you can gain knowledge about investments is to gain knowledge from books.
Along with these books, you must also have updated knowledge about the current and trending stock market companies and their growth.
2. Choose Companies, Not Stocks
Mr. Warren Buffet always invests by choosing the companies and not the stocks and he also advised others to do likewise.
It is important to have knowledge about the basic fundamentals, industry, performance, growth, and future analysis of the companies before choosing any company you want to make an investment in.
This will take some time to understand everything.
3. Diversify Your Investment
The saying, “Don’t put all your eggs in the same basket” is a common phrase you will hear from investment experts.
As a matter of fact, 80% of experts recommend diversifying your investments.
That means not to put all your money on one company but invest in different companies in different categories and sectors.
By doing this way, in case one or two companies fail to perform well, your money won’t be lost!
For a beginner, a 3 Fund Portfolio is recommended:
75% investment in Equity
15% investment in Bonds
10% investment on Real Estate or Commodities.
Avoid investing in Fixed deposits (FD) or Debt Funds.
One of the main disadvantages of investing in Fixed Deposits or Debt Funds is your money depreciates and the returns are minimal.
4. Hold Your Stock Investments For Long Term
Always focus on the long-term benefits rather than the short-term results to gain.
With the long-term holdings, you will see the power of compounding as your investment will grow exponentially.
The compounding principle is one of the main factors that will make you rich and wealthy.
The longer you hold your investments, the better for building your wealth.
5. Start To Invest As Early As Possible
If you start investing in your early years like in your 20s, you will have more time to let your money grow exponentially.
You will also be able to take more risks which comes with higher rewards.
Starting to invest from your 20s will also allow you to invest more money in the shares market as your expected expenses are lower.
Needless to say, it’s still not late even if you are in your 30s or 40s.
What matters is that you just take your FIRST STEP to invest for your future.
Now, if you follow these criteria, you won’t lose patience or get panic regardless of the market fluctuations.
How To Start Investing In Stock Market
To be able to invest in the stock market, you need to have a Demat account regardless of whether you want to buy stocks directly buying from the company or broker.
Opening a Demat account is free.
You can open a Demat account with any of the following popular demand accounts like Upstox, 5Paise, Zerodha, ICICI Mutual Funds. I used Upstox for my Demat account.
You will need to complete your KYC (Know Your Customer) details with your PAN card before you can buy or sell stock.
Once you open our Demat account you can start buying, trading, or selling any stocks you like.
To Sum Up, investing in the stock market is one of the most profitable ways of building wealth and becoming rich.
Becoming financially free from the stock market is not a hype or scam, but a very practical and doable step that everyone can take.
You can start investing in small amounts and then start to increase the amount according to your cash flow.
You can start investing in the stock market business and become rich without hard work by using a platform like Upstox, Groww, etc. which gives you the portfolios of companies at your fingertip on one platform.
The longer you let your stock investment grow, the more you will make money.
Start investing in Stock Market and live the dream of your life by becoming financially free.
NOTE: I am not an expert in this field, but I am just sharing my knowledge and experiences in using these stock market businesses and what works best for me.
It is entirely up to you to decide where to put your money to work for you.