Tips For a safe and smart stock market investment

There are people who make stock market investments and there are those who make smart stock market investments. The difference between the two lots is nothing but the profit made.The resources that are trying to grab your interest are so many. From mutual fund companies to Wall Street brokers, financial planners to financial magazines- all have their eyes rested on your money. In such a scenario, investing can be a daunting task, as you find yourself clueless as to who should you listen to? And how do you avoid risks and invest in a safer way?Here is how you can be a smart stock market investor-

1. 1 Forgo emotions- The best thing to do while making stock market investments is not listening to your heart. Your emotions can prove fatal to you. If you are anxious, you are going to sell when the stock has dipped. Temptation might compel you to purchase more shares when the stock has soared to an all-time high. However, in both the cases it is advisable to not take any action. Even if an action is taken- make sure it is just the opposite of what has just been mentioned. You should buy low and sell high. But your emotions may drive you to do the opposite, i.e. buy high and sell low. Take a deep breath and wait till the temptation subsides.
2. Plan, plan and plan –  Planning is the cornerstone of success. Most successful people have succeeded because their plans worked. Only a smart investor understands that having a plan helps avoid terrible mistakes. Therefore, it is important to figure out the right asset allocation strategy and decide when to rebalance. Planning in this regard can save you from losses.

You cannot, however, expect to come up with the right plan overnight as planning requires brainstorming. Do not make your plan very complicated because you are to bank upon it for all your investment related decisions.

3. Switch off the television-   Remember! You do not require the financial media to guide you. There is none other than you who understands your investment requirements and expectations better. It is your money and you are the right person to decide where it must go.
4. Do your research-   Never ever buy securities haphazardly. Dig out everything about the company first, like who are its competitors, how is the management, its earnings and growth prospects.
5. Avoid too many-   It is advisable not to invest in too many different securities. Have a few and keep a close watch on them like a smart investor. Making a list of stock market investments would help.
6. Keep cash-   Do not use all your capital in buying securities. Keep a considerable amount of it in cash. That prevents you from going absolutely bankrupt, if things go wrong.

Now, that you understand what makes you a smart investor, go ahead and make your foray into the big but not-so-bad world of stock market.