Investing in Stocks?

A few points before starting out on investing in stocks:
  • Never invest more than what you can afford to lose. Stocks are volatile, and no matter how much you study them, or read up on them, they have no guarantee.
  • Losses are a part of the game. Be ready to withstand them.
  • It is no shame to lose money. You will lose some and gain some. At the end of it, all you are planning to do is to lose lesser and earn more
  • Always put stop losses on all the stocks you have. Never ever be careless about it. It is mandatory and will help you if things go dark.
  • If you believe that you always want to keep a stock, put a very loose stop loss, but never have a stock without one. For example, if your current value is 100, put a stop loss at 75, but don’t shy away from not doing it at all.
  • Never play by hope. Play by the numbers. If you just believe that a stock will move up because you think it will, and are hence ready to keep taking losses, then don’t. Sell it off, take the hit, and buy a more reliable stock.
  • Book profits if it’s a lucky pop. Sell off at least 50-70% stocks, and keep the rest if you still want to play at it. (again, with a stop loss)
  • Invest long term in big market cap, big revenue companies. They will mostly always have a growth trend. The growth will not be drastic, but will be continuous.
  • Invest in sure fire dividend stocks which have been around for a long time such as proctor and gamble, Johnson and Johnson, Walmart, Cisco, McDonalds, Starbucks. Remember, people will always need to eat burgers, will always need to drink coffee and will always need toothpaste and baby shampoo. You may no longer need a Nokia 6610, but you will still need to wash your underarms with soap.
  • Put most of your money/savings in long term growth or safer growth options like bank, CDs etc. (or buy a house if you must).
  • For those who want a breakdown in investment, I would say, put around 20% of your savings in high risk high gain growth. Put 40% in safer options, such as long term strong dividend stocks. And put the last 40% in safest options such as a CD or a savings account.
  • Have fun investing, and don’t take it too much to your heart. Enjoy the ups and downs (only because you have invested money which is surplus, and not what you need to eat and drink everyday).
Whatever the blog says does not hold me liable for mistakes or leaps and bounds you make. It’s a personal opinion after all.

Chota βeta

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