5 Things to Know Before Investing In Share Market

5 Things to Know Before Investing In Share Market

If you want to get rich and get the maximum return on your investment then Share Market is the platform for you. There are some things to know before investing in share market. Wanna see step by step guide to get in Nepal Share Market? Having said that, it is also the platform that can make you homeless in a minute if you don’t know the nitty-gritty of the market. Stock investment is unlike any other investment because it has the maximum output and maximum loss at the same time.

If you know what the share market is and have detailed knowledge of how the stock exchange works? Then you are the right person to start investing in the Share Market. Bear in mind that shares and stocks are bound to crash or rise at any given time, making it the riskiest business to invest in. But with some discipline and depth knowledge, you can avoid being scammed by the share market. In this article, we will discuss 5 things to know before investing in the share market.

Things to Know Before Investing in Share Market

1) Learn and observe before you commit

The year 2020 really allured the most people into the share market, especially in Nepal. At least 40 lakhs Demat account is active at the moment ready to dive into the share market. Share market is not something you should blindly jump into. If your friend has invested a good amount of money in a particular share, it doesn’t mean you should do the same. Everybody invests according to their knowledge and interest. In the stock market, even the best can lose money at times, so no one is actually safe. 

The share value of a company can go up or down as per the performance in the market. Knowing when to invest and when to sell is the most noteworthy step you should learn. People go after the crowd, its human nature. In the present business-minded world, quantity wins over quality, no doubt about that. Should you choose to follow this trend in the share market, you will be a loser rather than rich.

In the present context of Nepal, many people who know about shares don’t invest in them, and those who are amateur invest blindly and heavily. This bad move only makes the rich, richer. No matter how good you are, investing all of your money in the share market alone might not be the wise decision.   

2) Only invest your surplus funds and have a backup plan

If you are a rookie in this field, you are most likely to be brainwashed easily. Intelligent and clever investors might lead you to invest in the wrong place, directly or indirectly. Only those who have Patience & Will shall succeed. Share market is a very tempting field, you can make 7 times the original investment within months at times. This motivates many rookie investors to invest more and more without reading and understanding the market statistics and movement. The result? You might wake up to the stock crash. Within a minute you have nothing but regret. So, the best advice is to invest half of your income in land or other property.

3) Strictly avoid loans and Leverages

The main goal, especially in the share market, is to reduce risk as much as possible. And having leverage means more risk than usual. We can’t level Leverage as the bad investment but it certainly invites more pressure and risk on the table, distinctly to the new investors.

4) Don’t go after social media

Nowadays everything is driven by Social media like Facebook, Instagram, etc. Everyone is a Youtuber and influencer in this digital world. This is where everything gets tricky. Such Youtubers and Influencers will tell you to invest in some particular company for their own reasons. At the end of the day, half of them will be wrong. This is what scamming looks like in the real world. They will lure you to invest in something and if things go south, they will cover up by saying ‘Share market is full of risk!’

It’s wise to listen to as many minds but in the end, it is you who should make the decision. And bear in mind, the decision should be made after a thorough investigation of the company where you want to invest. How progress of the company is in the past, present, and future? You have to get a detailed report of this in the first place.

5) Take a calculated risk and diversify accordingly.

In a share market, you have to take calculated risks. So, what do we mean by calculated risk? 

It’s a fact that the stock market is surrounded by doubts and risks. At some point, you have to commit and take risks if you want to invest in the share market. The most crucial thing is to make sure you can recover the loss in time with your income or side business, should something go wrong. Making sure you can gain the maximum profit and also bear the loss is what calculated risk is all about.

Investing all of your money on a single company share is a ‘Big No’. If the share value falls, it’s checkmate for you. That’s why you have to invest in multiple shares which are doing great continuously from the past in the stock exchange. This might be an intelligent way to diversify your share market business for a better future.

Since you have stuck with us this long, here are some bonus tips for you to consider ‘Before investing in Stock Market!’

• Avoid peer pressure and herd mentality 

• Be disciplined and follow stock marketing strategy

• Don’t go with emotions while buying and selling shares

• Always remember Share Market doesn’t guarantee a profit

Related Article

Best College for Computer Science in Kathmandu Valley

Best College for Computer Science in Kathmandu Valley

Best College for Computer Science in Kathmandu Valley

July 23, 2021

After +2, students totally get confused in choosing the best college for themself. To make their searching easy, we have made a list of the best college for Computer Science in Kathmandu and near the Kathmandu area, for Computer Science...

Step by step guide to get in Nepal Share Market

Step by step guide to get in Nepal Share Market

Step by step guide to get in Nepal Share Market

July 11, 2021

If you are a complete beginner in the Share Market, here is a step by step guide to get in Nepal Share Market. Let's dive deeper into it. Stick with us till the end Also see: 5 things to know...

Corona-virus (Covid-19) impact in Nepal

Corona-virus (Covid-19) impact in Nepal

Corona-virus (Covid-19) impact in Nepal

July 7, 2021

On the 31st of December, 2019, a virus was discovered in Wuhan, China, which would later destroy millions of lives, dismantle countless hopes, and destroy the world economy. Today, the disease is known as COVID-19. Remember the times when we...

Top 7 Major Industries of Nepal 2021 And Their Growth

Top 7 Major Industries of Nepal 2021 And Their Growth

Top 7 Major Industries of Nepal 2021 And Their Growth

May 2, 2021

CIA reports that the main industries in Nepal are the tourism industry, tapestry and textiles industry, small rice jute factories, sugar, and olive mills as well as cigarettes, cement plants, and brick mills. Besides manufacturing in rice, wheat, and oil...

Small Enterprises in Nepal And Their Importance

Small Enterprises in Nepal And Their Importance

Small Enterprises in Nepal And Their Importance

April 9, 2021

Wanna know about the small enterprises in Nepal? Enterprise is the ability to turn a thought into a successful business. A company is different, as it combines the other three factors: land, employment, and capital. Enterprise is a different word...