Basic rules for investment in shares Posted Date: 31 Oct 2009     Resource Type: Finance/Investments     Category: Share Market Author: chetna shah Member Level: Gold     Rating: Points: 20 (Rs 15)

The Game of Stock Market is some times said as Gambling. Many youngsters are getting attracted towards it. The reason is High return in Less Period. They think it as a quicker way to earn fast money. And we observe that many people have made their living from it. But at the same time many people fail in it. How or why is this variation? Rules.This is the answer to the question. We say that Rules are made for breaking but, its again true that no one have acheived anything by breaking a rule. Breaking of rule might show you short term profit but it will definetly show you a big loss in future. And when we talk about Investment, Following Rules is Must. Here we go with some basic rules. 1. The very first & a must be followed rule is. Never Invest any thing that you cannot afford. That is, do not invest by taking loan or by using your credit card. It again dont means that you should invest your savings, that you have saved for some specific purpose. What it means is, you should only invest what you have extra, the money that will not be required by you in a near future. 2. Now you have money, & are ready to invest. But wait, Never start before having a knowledge of how to invest, Which shares to buy, when to buy etc. Take some time. 3. Ok so You have decided on which share to invest. You think that its a right pick, & you found yourself ready to make profit. Now here comes our 3rd rule- Make a habbit not to invest more than 10% of your investment on any single share. Why? Because the Stock Market is Unpredictable & No one can predict where it will go. If your selected share goes down, you will loose only from 10% of your investment. 4. You are in the game to make profit. But be ready for losses. Now you should be aware of How much you can afford to loose? Decide on the amount or percentage below which you cannot afford to lose. Now if by badluck your pick reaches this amount sell it immidietly & avoid further loss. This is known as Minimising your loss. 5. Whatever investment amount you have. Keep 10% of your investment safe. It might happen that you have invested 100% of your investment. & now you get a information about a particular share that is going to rise. But at this time as you would not be having any cash handy, you might miss this opportunity. So you can use this 10% at this time. 6. Dont lose you confidence with a loss, & Dont be overconfident with profit. These were something from me. Add your owns rules to it & invest wisely.

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