Share Market

Share markets always fancies many people because, they find many of their friends, relatives and many others making profit. So they are also tempted to invest their hard earned money either through mutual fund players or in their individual capacity. Mutual funds are always a safe bet as against going in individually.

Then why people go in individual capacity? Because, they can amass more profits, which the mutual funds can't do it for them at an high exposure towards risk.

What are all the precautions to be taken if you are going to go on your own?

1.     Have a reliable broker, who can fetch you shares at the prices you want. 

2.     The most common mistake done by many shareholders who go in their individual capacity is that they do not have any knowledge of the company in which they are about to buy the shares. They should have the following pulse parameters by going through the company's Annual Report:

·        Earnings Per Share as reported in the annual report.

·        Earnings before Interest and Taxes.

·        Ratio between Earnings before Interest and Taxes and Turnover.

·        Ratio between Earnings before Interest and Taxes and Net Worth of the Company.

·        Cash flow statement, which is a vital parameter that indicates whether the company has got money in hand to pay its shareholders, etc.

3.     Moreover, share markets are bound to severe fluctuations. It might bring you wind fall gains or sweep     away whole of your investments. "prepare for the worst"

4.     Diversification of your portfolio investments is an essential ingredient for success in share market. Eg: If you find the pharmaceutical sector to be more profitable that you pump funds in various pharma industries. Your portfolio will be shining. Imagine, if the whole pharma industry goes down due to some reason. Then you are the looser!!! Therefore invest in various other sectors like IT, infrastructure, telecommunications etc. 

5.     Finally, to play in the share market in personal capacity, one should understand this ugly truth that they will loose at some point of time and they won't be gaining always, unless and until that person is an expert.

There is no win-win situation in share market. At the same time, if you are going to strike at the right time, you are the champ!!

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Disclaimer: The above mentioned content are few tips for the readers regarding the share market and how to invest in it. Based on the above content if any losses are incurred by the readers or by their relatives due to soliciting their views based on this blog, the author will not be responsible.