Do you have the template to invest?
Do you want to succeed in investing?
Investing in the stock market and making money is not an easy task. You can look at your friend for an inspiration and start investing. That is only half the task done. Getting success like your friend takes lots of hard work and especially controlling your emotions.
Your friend would have invested and waiting calmly for the stock to work for years. While on the other side you want to sell and make quick money immediately. This is instant gratification. One of my CA friends is investing for the last 15 years. He has recommended investing in a few of the stocks to his another CA friend. In the span of 3 months, he learnt the basics of the stock market and few stocks which he can rely on.
Confidence bias ;
Given the confidence in making money, he started analyzing charts and tried to identify the next best stock. This led him to invest in a few of the stocks on his own. It kept falling. When he was questioned on this stock decision his simple answer was, “I watched all the stocks timeline and everything has ups and downs, which means anything which falls will always rise”.
It is 2 years since his investment and still he is holding to those stocks in losses.
Why are you investing?
You may even forget the reason for your investment in the stock market. I had a friend who had invested in the stock market almost 10 years before in some of the good stocks. His thousands of investments had turned out into several lakhs now. He doesn’t want to sell any of those immediately or even in the future.
Another Chartered Accountant, had burnt his finger by doing derivative trading in the stock market during the mortgage crisis of 2008. He later understood the real investing and bought some shares. All these stocks have grown drastically. Still, he did intraday trading for the sake of trading and lost most of the money again.
Five-point template to invest in the stock market!
Template is nothing but the rules you draw and stick to it. If you are building your home, definitely you will have a building plan. You prepare the budget for the building based on this plan and try to stick to it. These are steps to make sure you achieve the desired home at the desired budget.
Similarly, if you have some rules for your stock investment, it is easy to stick to it. As you had seen in the introduction, the stock market is all about emotions. It is difficult to replicate the success of your friend consistently. All you need to do is to achieve your investment goals without worrying about your friend’s success.
Five points template which you can follow,
Maintain an excel or diary when you buy or sell
Investment goal like retirement, buying the home, etc, so it is easy to sell at that time
Time given for your money, a minimum of more than 3 years
Are you buying Large-cap, small-cap or mid-cap
Stop loss, how much loss you can digest and still hold on to it
The above five-point template helps you in maintaining your portfolio. It may also help in your investing success. Many of you may not know where to start and even if you start you may get lost in the daily chores of life.
This five-point template is just the starting point of stock market investing.