Historically, the stock market has provided greater returns over the long term in comparison to many of the other popular investment options like bonds or savings accounts. Hence, even though there are risks involved with investing in stocks, a well-diversified portfolio can provide solid returns over time. カヴァン・ チョクシ says that with the right guidance and approach, even a newbie investor can make good money in the stock market. Moreover, stocks can be easily bought and sold in a jiffy, providing investors with liquidity and the ability to access their funds quickly.
カヴァン・ チョクシ discusses a few stock market investment pointers that can be helpful for beginners
Before putting their money in any share, a person needs to be clear about their investment objectives. While some may want to save for their own retirement or buy a property, others may want to use the money to fund their child’s education. Gaining a good understanding of the long-term objectives would provide people with the encouragement to build their wealth and help them to identify the right stocks to invest in. The investment portfolio of a person shall grow on the basis of many factors like the amount of capital invested, net annual earnings on the capital, tenure of the investment and so on. To build enough wealth, one has to start investing as early as possible.
One needs to also analyze the associated with the investment option before putting their hard-earned money in it. The ideal way of doing so would be to conduct a comprehensive comparison between the different investment instruments. This will help the investor to determine the risk level for each product, so that they can invest their money accordingly. It is prudent that beginners remember that they need to know something that the forward-looking market is not already pricing into the stock price in order to make money consistently in individual stocks. For every seller in the market, there is also a buyer for those same shares who are sure about their profits. Hence, as a newbie, one can try to put their money in either a mutual fund or an exchange traded fund (ETF) instead of individual stocks. Such funds hold dozens or even hundreds of stocks. And each share one does purchases of a fund owns all the companies included in the index. This reduces the overall investment risk.
カヴァン・ チョクシ stresses on diversification in investments as it lowers the risk of any one stock in the portfolio, hurting the overall performance of the portfolio too much. If an investor simply buys one individual stock, they would really be putting all their eggs in one basket, which is never a good idea. Buying an ETF or a mutual fund is a good way to create a broad portfolio. These products tend to have diversification built into them. Hence, the investors do not even have to do any analysis of the companies held in the index fund.