As you all know investing is the best way to grow your money. All of us are now more interested in making more and more money with our investments. However, the truth is many people around the world don’t know where to invest their hard-earned money. Please read my blog to know how you can grow your money by getting a higher return because I am going to share with you how you can do this. There are many investment options available today. You can expect an average return from them.
- Savings Account – 3.5% to 7.1% per year
- Fixed Deposit Account – 7.10 % to 9.50% per year
- Mutual Funds – 10% to 20% per year
- Stock Market – 15% to 28% per year
These are based on Indian scenario. However, you can also investment your money in real estate, insurance policies, bonds and commodities.
Out of the many investment options, the stock market is the best option for getting a higher return.
Things you need to remember for getting higher return form stock market:-
• Risk & Reward Ration:
The risk & reward ratio refers to how much you want to lose and how much you want to profit. If you want to be a successful trader then you need to consider the ratio. Most probably if you maintain 1:1.5 risk and reward ratio then you will be successful. For an example, if you have bought a stock at Rs. 10,000 then your profit target must be 15% and your trigger price (stop loss) 10%. That means you should sell your stock when the stock price increased to Rs.11500 or decreased to Rs. 9000 from Rs.10000. Now, If you have bought 5 companies shares at Rs.10000 each, that means your total investment amount is Rs.50,000 and out of your 5 shares 3 of them have reached the target and 2 of them not, and you had to sell these 2 at stop loss. Your profit will be Rs. 2500. That means if you earned 5% return in short term.
• High Returns with Low Risk is the Key:
Warren Buffett says, “Never invest in a business you cannot understand.” Do a research yourself or ask your financial advisor before buying stocks. There are many blue chips stocks those can give you higher return with minimum stock. I always suggest my family members, friends and relatives to invest in blue chips stocks where risk ration is very low. So, target blue chip companies. Never ever invest in stocks if you don’t have any knowledge about them.
• Invest in what you know:
Do not put your money into any unknown stocks. You don’t need to find hidden stocks and invest as per your broker or friends advice. Research for growing companies around you. Study if they are blue chip companies or not, study fundamentals of those companies if they are financially strong or not. This is the most effective way to invest and earn money from investing in those companies.
• Pay low brokerage:
Most of the stock broker’s brokerage is very high. When you do intraday trading or delivery based trading they take most of the profit from you as a brokerage. You need to find the discount brokers who take the lowest brokerage from their clients. Your earning profit will be maxed if you are able to cut down your brokerage percentage by finding lowest brokerage taking Stock Broker.
• Always avoid panic:
Panic is an emotion that forces us to take a wrong decision. In a panic, we always sell our stocks when time suggests for buying and buy the stocks when perhaps these should be sold.
• Learn when to swim with the tide:
It is shown that market pays the investors when they go against the prevailing trend. In a normal situation, the average investors do not necessarily swim against the tide. In the other words, do not buy the stocks if the stock price is falling, wait until the buying pressure is coming back on the stock.
• If you are a new investor then be prepared for some small losses. To become successful in the stock market you must tolerate some small losses.
• Persistence is most important when you are learning to invest in the stock market.
• Always try to avoid types of investments that are volatile, such as futures, options, currency and foreign stocks.
• For identifying winning stocks you need to learn fundamental and technical analysis.
• Remember History always repeats itself in the stock market.
Patience and thorough analysis are most important in the stock market. Once you have picked right stocks for investment then go for it, otherwise, you may miss the flight. Just think about the people who are still kicking themselves for missing the impressive rise in companies, such as Reliance and Infosys etc. Stock trading isn’t about predicting what is going to happen it’s about proper plan and knowledge.
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