Some Important Lessons About Stocks That We Should Know

Hello Hiveans!

Guys! We learn many things in our school and colleges like math, physics, chemistry for the years. It's our typical thinking that this type of study can give us a job. But even a single school or college never guide or teach any student that how you can manage your money and how does money actually works?.

That's why today, financial learning is a self-learning topic that should be taught by yourself. If you started earning income or in future you will earn and you want to secure your financial future but you don't have nay idea how to do that. Today I'll give you some lessons about stock market and investing, this will boost your confidence and you can start your investment journey. So be with me

Source

First Lesson

First and most important lesson that you need to learn is power of money. Most of people don't know the power of money that why middle class person salary hardly fulfil thier expenses and they spend thier whole salary in useless things.

For example, if a person buying any stuff or product a cost of 1000 rupees, he thought he is spending just 1000 rupees but a real investor watch the money in a different vision like if a real investor thinks to buy a product cost of 1000 rupees then he will thought that if he didn't spend this amount and he would get 20% return on this 1000 rupees then after 20 years this 1000 rupees will be grown into 1 lakhs.

So if you invest these amounts for 15-20 years instead of spending on useless things and when you will got a profit then you will be taught power of money. So save your money as more as you can and invest that amount in a better way. That's why a quote is very well known that "if you will save money today, money will Save you tomorrow".

Second Lesson

The second lesson that we need to learn is learn from failure. Guys! There is not even a single investor which have 100% win rate means who never face losses in stock market. Even words number one investor Warren Buffet also made many mistake in his investment career like, in 1993 he invested in a company called Dexter Shoe.

He thought that there is a competitive advantage in this company and it will grow but in future demands goes down gradually and finally company was flopped. So, Warren Buffet said that he does mistakes to learn from these mistakes.

Source

So, when you did mistake in stock market like investing in wrong stock, don't be afraid of it because you have still chance of growth your other remaining stocks. When you choose wrong stock an it depleted then learn from this stock that which was the mistake which you have done and in future neglect that mistake to get better experience. The time will come you will select stock which will give you a high profit.

Third Lesson

The third thing which you need to learn is invest yourself or let someone invest for you. Most of people didn't have enough knowledge about stocks an those who have some knowledge they didn't feel good in investing an they consider it a headache. These type of people always consider mutual or index funds for investing.

Those people who didn't understand the companies balance sheet and also they don't have any interest to read that sheet. They can invest in their money in mutual fund in which your money invested in different companies by a fund manager who is charge some small amount and invest your money in different companies for you. He do all the analysis, see companies financial reports, fundamentals and all the factors that are important for investing in any company and he charge some amount from you in the from of expense ratio.

First you need to do research about particular fund in which you are going invest in. What's the fund's past record? Who is fund manager? And How much they are charging expense ratio? You need to research about these question before you are handing over your money to that fund. He may have much knowledge more than you but it's doesn't mean that you just trust him a lot. Always track your funds and performance and if you are not well to track the funds and performance then you can invest in index fund directly.

Source

When we go to buy a new smart phone whether you just buy it by watching its price? No we see the model also and ram, rom, battery, camera etc. You see all the specifications of that mobile before buying it. Same likewise, stock price is doesn't matter. Most of people just buy the particular stock by checking the price of that stock.

A very small number of people analyse the background business and performance of that stock but most of people just buy by checking prices. As you buy the mobile after checking all the specifications same you need to check out the company's management, productive sale, competitive advantages the you check the stock price. After all these analytical researches then we can evaluate that the price is high or low. If you don't know anything about that company than there is no value of price of that stock.

Wrapping Up

Then the importance factor comes that is important according to my opinion you need to start investing early. Many other countries have policy that you must have 30 to 35 thousand to start investing but in Pakistan you can start investing with 1000 rupees only.

Many people may thought that how much they earn from just investing but if you invest this amount for long term you can get a healthy profit from this investment. The power of compounding have unbelievable magics that we can't imagine how much we can earn from this. So start your investment as early as you can.

Signing Off MindGamer

Posted Using InLeo Alpha