Ever wondered, why some people never lose money on investments? There has to be something which they do, which others are not doing or are not able to do in a disciplined manner. We try to give you a set of Ground Rules which you have to follow if you don’t want to lose money in financial markets. Here it goes:
Ground Rule 1:
Keeping yourself updated with the current happenings (like changes in political scene, interest rate movements, commodity price movement, Govt schemes for a specific sector to mention a few) is a must for every investor as he will then be aware of various events in the financial markets. In addition to this, there are various matters that need to be looked into to keep a check on your portfolio. If you do not then you may end up losing your returns.
Ground Rule 2:
You should make a habit of analyzing your investments, valuing your investments and rebalancing your portfolio. You can analyze your investments by looking at financial statements of the companies, see how they have performed in the past and if you expect that the company will perform well in future, then you can think of investing in that company. You should try to familiarize yourself with the financial statements of the company to understand how the company utilizes its finances. You should be wary of the publicity gimmicks that a company would put up to impress the masses. You should develop a knack to read through what the company writes up on its performance as a part of the results declared. You should keep an eye on how the value of your investments changes depending upon fluctuations in the markets, economic issues, and other factors. If you are not able to do above on a disciplined basis, it is better to restrict your investments in mutual funds and keep a watch on the NAVs
Ground Rule 3:
Longer you stay in investments, better are chances of success Every investment you make is crucial hence you should monitor it from the time you invest into the investment product till the time you receive your proceeds from the investment. The time period from the beginning of the investment, that is when you pay out from your funds to buy an asset, till the time you receive your proceeds from the sale of the asset is termed as the Investment Life Cycle. Every investor should monitor his investments from the time of entry till the time of exit. Throughout the time horizon you stay invested you should maintain a check on your investments.
The time horizon varies across investors. Some may enter and exit trades within few minutes, hours or within a day while some stay invested for years. But it is always advised that investors should remain invested for a longer time horizon to benefit from an investment. The longer you stay invested you attract fewer taxes also. Always remember that future is uncertain and it is not possible to take way Risk of losing money while making an investment. However, above ground rules can help you in minimizing your chances of losing money on investments.
