Investing in the share market means you become a part-owner of the company you are investing in. It is an efficient way to increase your capital in the long run. To make a billion from stocks you need to have a clear idea about investments. Keep patience for a bit longer period for higher returns than you could have earned modestly.
Buying stocks of a company makes you a legal owner of a part of the company. These are equity investments. You need to own and hold securities like bonds or ETFs, to receive interest and dividends. In the long run, the amount you invested keeps accumulated and along with the interest amount, you will receive higher returns.
The stock market is a kind of auction where buyers and sellers can be anyone, an individual, a corporation or even the government. The stock market price increases as the number of sellers outnumber the number of buyers and decreases in the opposite scenario. When diversification of the investment portfolio is important for minimum risks and higher returns, investors do not need to stay bound to domestic shares. If you are an Indian, then you can invest in several US shares as are permitted by the Reserve Bank of India. For example, you can invest in Amazon Shares, as it is one of the most promising sectors in the US. Just like shopping from the Amazon online store, purchasing any Amazon share is equally easy.
How to invest in stocks so that you can earn billions from the market?
Investing in stocks is not an easy task. You need to know a lot of things, go through several kinds of research, decide carefully which stock to buy, and then buy it. Let’s look into some factors that you need to consider carefully if you want to make a billion by investing in stocks.
- Plan your financial goals – You must plan your financial goals before you start investing in stocks. Planning includes the reason why you are investing, how much you can earn in return, what are your plans, is your investment for long term or short term, and your investment horizon.
- Understanding and focused – When you are planning to invest in the share market online, you must understand the market and look if you are comfortable with long term investments. Stay focused on your investment goals and have patience.
- Investment Budget – You must make a monthly budget plan according to your income so that the investment procedure becomes easy and manageable by you. You can increase your investment by making more savings and cutting down your extra expenses.
- Use Index Funds – Index Fund investing is popular as you can make your investment portfolio broadly diversified. Investing in a single stock and hoping to become a billionaire is unrealistic. Weather invests in more than one fund in different companies. You may or less but you will get a reasonable return.
- Buy and hold stocks – You need to buy and hold stocks for a longer period to earn higher returns in comparison to short term plans. You must keep this in mind even when the market prices drop.
- Keep patience – you need to keep patience while you are investing your money in the stock. Higher returns can be on. Only when they are kept at hold for a long term plan.
- Stop Regretting – An investor can’t invest in a company at exactly low prices and sell it with a higher price unless you got inside information of the company. So you need to accept the fact that either you are going to lose or you’re going to make higher profits tomorrow, with the investments you are making today.
- Check your Risk tolerance – stock market associated with several risk factors and you need to understand your tolerance capacity to those risks. Usually, at the youngest age, you do have the higher risk-taking ability. But as you reach an age of retirement, that ability reduces. So think about the risks and only then you can invest in stocks.
Always remember, your investment horizon should be dependent on the amount you are and you save. Have a decent knowledge about the stock market, don’t invest emotionally rather go for facts and data. Avoid penny stocks. Some investors do not have sufficient income and they think of investing in penny stocks as they are cheap. But always remember these stocks are highly risked prone ones, as the stock prices are lowered due to less demand of the company, bad performance, or some other negative issues.
Some major risks associated with stock investments.
While investing in stocks, an investor can face these risks –
- Market Risk – Market price fluctuation occurs from time to time. If the price drops then it will adversely affect the prices of some good stocks.
- Business Risk – Business can be affected due to poor management, or selecting a not so good company.
- Liquidity Risk – If you are investing in a company without proper research and the company is incapable to pay off their debts, then they cut the dividends that you were about to receive. At times you may go bankrupt.
- Taxability Risk – The taxes in various sectors keeps changing according to the Government. The industry you are investing may face a sudden increase or decrease in taxes, thus affecting the stock prices.
- Interest Rate Risk – The rate of interest paid on the investment corpus changes at times. This may affect the return rates from the stocks positively or negatively.
- Regulatory Risks – Several Companies face problems in getting permission from regulatory bodies. Thus the company’s profit gets affected as so is yours.
- Inflation Risk – Inflation in the market changes the overall production cost. It increases the value of the raw materials used in production. Few industries like education and healthcare face higher inflation rates.
Conclusion
There are several more risks associated with an investment in stocks. But if you are not ready to take risks then you won’t be able to earn more. Nothing comes for free in this world. So, be reasonable, learn more about investments, take help from your professional friends, and invest in stocks for a better tomorrow.
