Investment Approach for the Investors

The stock market has emerged to be one of the best investment tool in recent times. The fear of investing in the equity market is decreasing gradually as stats are coming with exponential rise in the Demat accounts. The main reason behind this the income potential of the people is increasing fast and everyone is keen on investing income to generate some more on that. Investors are getting cautious these days while investing. But still majority we can find asking the broker to invest at their own and just give returns. But this is not good practice of investing at all. Here we are focusing on the approach that new as well as experienced investors should follow to avoid the mistakes that majority is doing.

Following points should be factored while investing in different tools:

1. Risk

The risk appetite is on the top of the table. Basically how much risk we can bear on the investment should be factored first. Warren Buffett is always behind investing the capital which is surplus to us. We should not be bothered if we loose those. Usually investors are like in expectations of the returns as early as they invest. This approach should be avoided. Investment should be done with some time given to the stock to deliver better returns.

2. Vision

Usually we can see the approach of new investors is like as soon as they invest, they are always behind the returns. This is completely a traders approach. But it should be changed to investors way where investment is done with minimum a year vision. If one is getting some returns in a week or two, it could be always fruitful but expectations should be with long term vision. So many time investors invest in some stocks and if find 4­5% loss, straight they exit and invest in other stocks. This strictly should be avoided.

3. Study Oriented Results

Since our school life it is clear to us if we study hard, results will speak for us. This applies here too. If the investor in some other fields like Engineer or IT person who hardly can have Stock Market knowledge, they can approach to some advisory companies. In advisory companies, we can find certified Research Analyst who studies the stocks in all possible ways they can and gives proper recommendations. This could be a better way to generate study based returns.

4. Diversification

The diversification is digging its pillars in the market significantly. This is best used approach when the market is somehow uncertain. Even though in good times, diversification can be tasted as well. Diversification gives investors some add on benefit on the investment. For example if investor have invested his entire capital in single stock. His earnings and looses will be decided with respect to a movement in single stock. But if it is invested in 5­6 stocks of different sectors which minimise the risk as the earnings or looses will be calculated as per collective performance of all the respective stocks. With this approach, if any of the stock is really underperformed, then other stocks could minimise the losses.

5.Investment Approach

Investment should be done by dividing the capital properly. So many time investors can get opportunity to invest in the same stock again. At that time capital should be available. So investment approach should be slow and steady.These thumb rules are easy to listen but difficult to apply. If applied with good vision, surely will benefit the investors in long run.

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