Ultimate Cheat Sheet For New Investors In Stock Market


Are you someone who has recently cracked an awesome job and is gainfully employed? Don’t you feel an extensive sense of proud and fulfillment whilst you witness a fixed amount being credited into your account every month without any delay? Well, ever heard about stocks?

Being able to earn money through hard work, determination and knowledge acquired through a long time is a watershed moment for any young individual. But, earning is always accompanied by responsibility.

At the beginning of your career, it is quite easy to get carried away by going overboard with expenses. You end up spending lavishly and stack up stuff which is unnecessary and irrelevant, just to accommodate a high priced way of life.

Note that choosing for a better way of life is not a bad idea but going extravagant without checking up on your expenses and living on a month-to-month basis can turn out to be a poor decision in the long run.

Although coping with finances can be worrisome, with proper planning and execution, you can manage over them. It is good to hold aside a set sum of money in the savings account each month but it is best to invest the same so that it grows through the years to create wealth. The best option might be staring at Dalal Street Stock Exchange!

However, not each person is familiar with the technicalities of investments and has a great deal of knowledge about the same.

So, the idea here is to provide you with some basic tips that you can go along with while getting into the new world of shares and investment and also a golden point that would help you excel in any ways of life!

  1. Begin Early:

    Share Market

The most important thing is to start as early as possible. Your earnings will compound over time and help you achieve bigger and better goals.

Every investment guru acknowledges the power of compounding which unleashes when you start early and invest regularly for long periods.

When you invest early in stocks, you are prone to make errors and you can learn from them. Compound interest is interest on interest, where you reinvest interest, rather than paying it out.

A small compound interest investment would possibly appear frugal at the start but with time, when the cash is compounded the returns are worth a few millions at times.

Know How To Grow Your Wealth By Choosing The Best Mutual Funds 

  1. Set goals:

    Share Market Tips

    Observe your age, income, capital gains, the safety of capital, loans you need to repay, your monetary role and personal situations and decide your life goals consequently. Link your life goals with your financial goals before you jump into the stock market.

    Depending upon the purpose of your investment, your goals can be short/long/mid like whether you want to save in your retirement or you want to support your children’s education or purchase a house/ car or set up a business in future or so on.

    It is cautioned to keep long term mentality as it gives high-quality returns. Within the case of short term investments, you are more prone to make terrible decisions.

    You ought to have a transparent plan about how much capital you will need for the stock market, the amount of net annual earnings on your capital and the length of your investment while designing your investment portfolio.

  2. Knowing the law

    Stock Market Tricks

    Another essential factor to be considered while setting up an objective is to understand how tax laws will affect you and your stocks. Understand the tax consequences earlier than selecting your investment products.

    As an investor, you ought to search for alternatives that help you save tax and generate tax-free earnings. The best option for tax savings might lie a bit off the stock market in the form of Equity Linked Saving Scheme (ELSS) which give you the power of equities.

    It beats every other asset class when it comes to returns generated over long terms which not only save taxes but facilitates to develop your wealth. It has the shortest lock-in period of 3 years and you get access to your money fast.

    Investment up to 1.5 lakhs can be claimed as a deduction under 80C of Income Tax Act.

  1. Manage your finances:

    share market tips and tricks

    Before getting into stock market and other investments, restore an amount which you have to make investments. You have to be financially smart and start calculating your expenses. Avoid being in a position wherein you live month to month that is; whatever you earn you spend.

    Adopt a realistic approach while setting up your budget and concentrate on maintaining positive cash flow. You don’t want to land in a situation where your bills remain unpaid. Ensure you clear all your month to month payments, loans, money owed and different essential expenditures are also met.

    Additionally, keep aside a specific quantity in an emergency fund which can be accessed in case of any unexplained scenario or any untoward incident. This amount relies on your income and expenses and preferably must be 3 to 6 months of your monthly income.

    After all, calculations are done, finally, you came down to a figure which you can pay yourself and start your investment journey. You don’t want a whole lot of cash to start. Ideally, it is advisable to put at least 10% of your monthly income in investments.


  1. Know your Risk Appetite:
    Share Market for Beginners

    All humans’ ability to handle and deal with risks is different from the other. Your monetary goals, the time horizon, the assets you own and the experience you gathered are some factors which determine your risk tolerance in the stock market.

    Gauging your risk appetite assist you to choose the appropriate type of funding product. Avoid investments which could make you anxious and give you sleepless nights in case your risk tolerance level is low.

    You can invest in instruments such as securities, certificates of deposits, life insurance, savings accounts, and bonds, mutual funds where risk is low and returns too are low.


  1. Invest in things you understand:

    Stock Market cheatsheet

    Warren Buffett has famously said to “never invest in a business you cannot understand.”

    What he precisely means is that you have to learn how to value businesses and know to differentiate between the one which lies within your circle of competence and the one which lies out of doors of it.

    That doesn’t mean you need to be an expert on every company you come across instead you shown own the capability to properly evaluate the selected businesses.


  1. Find good companies and research well:

    Best Stocks

    Before investing in a stock, first, examine the company. Now and then, investors assume they are purchasing stocks at a discounted price but in truth, the stocks lack in quality and feature a reduced value.

    You have to by no means compromise at the quality and not allow low prices to influence your decision.  Though the rate is crucial it should be a secondary; quality of a company should always be the number one factor.

    Another advice which the leaders in this industry give is to get out of cash and to get into assets.  Investing in income-producing assets is a better option as cash can depreciate over time.


  1. Make automated investments:

    Stock market Investment tips

    You could avoid procrastinating by opting for automatic stock investments options. In this, you can choose an investment plan through various firms or investment services where you can set aside a certain amount of money which is automatically invested each month.

 Facts About Mutual Funds That Might Interest You!

  1. Diversify your investments:

    Investment Tips

    Diversification is a strategy adopted by investors to blend different investments in a single portfolio that may help them reduce risks and yield higher returns.

    When stock market goes erratic and stocks go downhill, even though a number of your stocks might suffer loses but when you have a diversified portfolio, then you can gain from other stocks which are probably rising.

    Investors prefer buying different stocks of different companies in different industries to even out risks. Sometimes they choose to invest in overseas markets so that a single bad event may not harm them massively.


  1. Say no to commissions:

    Investment Tips and Tricks

    Agents and other intermediaries will try to trap you into buying investments with attractive costs and compromised quality but fetch them high commissions.

    Sometimes, it is witnessed that these stocks don’t pay good returns to investors. So, it is clever to research about the company to avert falling into their trap.

  2. Control your emotions:

    Share market investment

    The stock prices keep on changing depending upon the market sentiments, rumours, and speculations. The daily ups and downs of the market can distress you. There’s an atmosphere of tension, stress and anxiety.

    Many questions like whether to sell the stocks to avoid any huge losses or to wait for the prices to rebound pop up in the mind of investors. Here, you should manipulate your emotions and be confident and positive.

    Emotions can hinder your logical decision-making ability. You should be calm and analyse the prospects and assets of the company before drawing any end.


  1. Keep away from leverage and speculation:

    Share Market Secrets

    In easy terms, “leverage” means the use of borrowed money for stock investments with the expectation that the profit earned will be greater than the interest to be paid.

    When the price of shares go up, it is all nice and prospects are great, but when they fall, investors lose a fair share of money from their initial corpus, plus they have to pay interest on the borrowed funds.

    Technically, this tool should only be used by experienced investors who are confident regarding their decisions. For new investors, leverage is risky and should be avoided. Also, a new investor should never buy any share by way of just accomplishing speculations.


  1. Evaluate your portfolio and keep yourself informed:

    Stocks Idea

    It is suggested to revise your portfolio and keep an eye out for any improvements. The investment stocks which is suitable for you today may not be the best for you tomorrow.

    You should track your investments periodically, analyse its’ performance critically. Ignoring your investments for lengthy durations can incur losses. Furthermore, markets are volatile and unpredictable.

    So, it is necessary to keep yourself updated about modern developments and accumulate some knowledge about the country’s and global economy too to minimise the probability of any loss.

    But before you get into any of the points, here is a golden advice for you. Remember that this would be the best decision that you might possibly take in your life and that is to simply learn and learn more.

  1. Learn fundamentals and invest in yourself:

    Learn to Invest

In line with Warren Buffett, one of the most successful multi billionaire investor, the best thing to do is to invest in whatever that improves your talent. If you have talent then maximize it.

Develop your skills, recognition on self-development, study finances, participate in various types of courses, seminars, coaches are some of the things which can be done to pay yourself first.

Reading self -help, finance and marketing books assist you to apprehend the jargon and collect expertise that can guide you in the course of your investment adventure. Giving yourself some time every day and growing your notion, self-beliefs and adopting some habits are crucial while you are focusing on self-development.

The intention is to learn more and earn more. You need to give up the herd mentality and start trusting your actions and keep yourself up to date.


Finally, never invest just to save your tax. This is a common mistake which every one of us perpetrates. To save taxes, people go for unplanned and unwanted multiple investments at the end of the last quarter of the financial year which serve no cause.

Stock trading

As a substitute, it’s far endorsed to follow the right method and start tax planning from the beginning of the economic year.

We all understand that investments can be risky, but for a new professional it is beneficial to be extra cautious and vigilant while pursuing a brand-new endeavor.

An un-seasoned investor should put a lot of efforts to learn and grasp sparkling opportunities and seek help from experts whenever needed.


Please enter your comment!
Please enter your name here