Before jumping directly on how much you need to invest in the stock market. You should have a clear picture of which type of investor you want to be, do want to become a long term investor? Do want to become a swing or positional trader? or do you just want to do Intraday?
As intraday is very risky for a new person who is entering the stock market, you should start with the safer instrument to trade, you can do swing trading like holding a share for weeks or months. You can hold good stocks for several years to get high returns with low risk. If you don’t have any idea about choosing good stocks, you should go for mutual funds, which is the safest instrument to earn money from the stock market. In mutual funds portfolio manager who knows how to pick good stocks will do the work for you. You just have to pay the money in the form of SIP or Lumpsum.
THE 20% RULE.
The 20% rule is you should at least invest 20% of your income in the stock markets. You increase the percentage up to 25-30% depending on your savings capacity. Why everyone is keen to invest in the stock market if there are much safer options like a Bank savings account and FD that is a Fixed Deposit. In the stock market, you can expect better returns on your investment. If you have invested for longer periods in the stock market you could end up becoming a millionaire or a billionaire with the help of the power of compounding, so the longer you invested the wealthier you’ll be. If you are earning a monthly salary of 20,000Rs, you should invest at least 4000Rs per month.
For the one who wants to become a Trader.
- Learn and then remove the ‘L’.
- Practice, Practice and Practice.
- First start paper trading or virtual trading.
- Do not take Loans.
- Do not purely rely on margins.
If you want to be a successful trader, then you should take care of the above 5 points. You should always learn before putting your money in the stock market. You can start paper-trading before investing your money. You should learn about different strategies and test the winning percentage of it. You have to select the stocks in which your strategies work best. You should learn about risk management that is how much loss you can bear in trading.
Never start trading with others money bring your capital, taking loans and losing money in the market will make your condition miserable. Do not rely on margins. Suppose you buy 100 stocks of ABC ltd of 100Rs each so the total value will be 10,000Rs but if you’re using margin then you have to pay 3000Rs. If you have taken a loss of 10% on the trade then you will be going to lose 1000Rs on your initial investment that is 33% of your capital has gone. So you should use margin wisely.
Money Making Trading Course (MMTC) by Tushar Ghone and Amruta Ghone is committed to providing an Advance level Technical Analysis course with 50hrs training at a nominal price. Our main aim is to enhance student’s financial knowledge and teach them profitable trading strategies. We also provide training for the next 6months along with daily Equity and options Analysis on our telegram Channel. https://telegram.me/MMTC123
We at Tstock Mantra Investments by Amruta Tushar Ghone provide complete Financial Planning for an individual i.e., Mutual Funds, Insurance planning, Retirement planning, and so on.
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