“Kiss” Well, Before Investing…!!

Friends, before you start reading, let me explain KISS. No, no… It is not what you thought. KISS=Keep It Simple & Safe. I know this explanation has broken your heart. But this article is worth reading if you are new bee in Stock Exchange or you are planning to invest in stock exchange and having lots of fears related to investing in market. This article will help to overcome the fear we face during investing in market. This article will explain how to understand market and start investing safely. Do not worry for tough market mantra and complicated words used by market guru. Keep it simple and safe. Let’s KISS. 

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Friends, welcome to the world of investment. You are about to join the biggest community of this world, named Investors’ community. It is a big decision of anyone’s life to start investing, and it should not be taken without sufficient preparation.

Well, when you are entering investment world, especially stock exchange, you will face many hurdles. Many factors will affect your investment ability and decisions. As you are new to this world you may face some fears.(I personally feel these fears should be added in reality show Fear Factor 3rd sequel .) Let’s try to learn more about these fears. Understand these fears before facing them.

You and I can hear people around us talking negative about stock exchange. They have many assumptions for stock market trading. And those assumptions are passed to other people and they spread kind of panic. Some of them are… Investing needs time, Fear of insufficient financial knowledge, Fear of technical knowledge  of  market language , Investing is only for millionaires and common man cannot earn, Fear of stock market crashes, Stock market investing is a gamble… and blah blah blah …!! The best way to win any fear is to face them. Face your fears of the stock market directly by learning the truths behind erroneous information you may have heard. Let’s start facing them one by one.

Stock market Language:

Long position, short covering, out of money option, recession, square off, auction, net asset value, EPS, resistance, support, break out… all these words can give blank look to an average person who is not related to stock exchange. This is called street talk. Do not worry for these terms. If you send a stock market guru to cricket ground he will have the same blank look when commentators will announce the batsman is out LBW. If you make the same person sit in base ball stadium, he will have almost same face when he will hear the word “home run”. Every sports, place has its own language.  The rule is same with stock exchange. The stock market has a language all its own. But always remember, your need to learn this language is limited as a new comer. And you will learn it any way as you spend time in stock exchange. do not feel shy to learn these terms. Try to understand the logic behind such complicated words. For example, Portfolio Management. Now think practically. Why would one person give his whole investment to someone to manage it? In normal case he won’t give. But when he see the word Portfolio Management he will be ready to give the same amount to the same person. Why? Just because this term is used by stock market guru and other people many times and so this word has goodwill to attract normal people. Investment managers, brokers, and portfolio managers regularly use terms that they know their clients wouldn’t understand. Since no one wanted to appear stupid, the clients would simply nod their heads a lot and be grateful that someone was around who could interpret all these obscure terms. Stupidity? Right ? yes it is. But I m not telling one should ignore the value of financial analyst or portfolio manager. They are needed for better return. My point is simple; one should not have fear of such terms used by techie people. Jus face them and ask them to explain. (Leave those financial analysts who cannot explain you. Because those who cannot explain, may not even understand the same.) I would suggest you to watch some good TV channel or read some nice articles or books on stock exchange. it will help you growing your vocabulary. Do not be surprised if you come to know that u knew much more than you thought u know…!! Remember the golden rule: If an investment is worth your hard-earned cash, then it’s certainly worth taking the time to understand all the information available on your investment.

Stock market is for Millionaires and normal people cannot earn here.

Yeah, we all have heard this sentence at least 100 times. It is the most common reason normal average person is avoiding the stock exchange. But give it another thought. Anyone of those who is thinking stock market is  not for common average man, if that person had bought 1000 shares of Reliance industries Ltd. In 2008 crash, investment would be the last thing on this earth he should worry for.  Investment in stock exchange can be the best activity to earn for yourself, if you do it properly. Just follow basic rules and you can rule the world. In any business you will find the same risk factor and same return too. One fear is that the stock market is made for big investors and that the average person doesn’t have enough funds to actively participate regularly in market. Deal with this fear by discovering the many investment options that are designed to accommodate people at any financial level. For example, in India , Nifty , Option trades need less than 10,000  to 30,000 INR. Now try to find a single business in India, which can be started with 30,000 Indian Rupees. Friends, the truth is, stock market is for small traders only and the same small trader can become millionaire. Fortunately, the financial market in India is a place of business, and as such it continually modifies itself to attract new investors. Try to find the opportunity to invest. Follow basic rules, and keep it simple and safe. (KISS).

Stock Market Crash

Stock market crashes in past is one reason why people do not enter the market. OK, let’s have a look at past crashes. Harshad Mehta crash in India , in 1992 and sensex was  at 4000 level, after that Ketan Parekh crash in 2002, sensex was 7000 level. Latest crash in 2008 crash, sensex is 17000 level. Now try to understand the truth, in last 30 years we have seen many crash in stock market, but at the same time we are seeing constant growth. Stock market crash fear is not more than hype. The history of the stock market has taught us that bull, or favourable markets tend to last longer than bear, or unfavourable, markets.

Many people are frightened by the stock market because of the stories about past market crashes. Yes, those crashes did happen, but the fear surrounding them is more hype than substance. Many fears may be somewhat justified. To not invest because you fear a stock market crash is not one of them.But just because market crashes happens for 9 months on average of every 4 years one should not miss the change to earn during those 4 years.

investing in stock market is gambling

The fear that investing in the stock market is gambling and reliant on chance is proved wrong as new investors learn that the processes and tools with which they pick stocks are not based on random chance or luck  but on intelligent research, fundamental and technical analysis, government policies, sometimes insider news  and decision making.

The difference between gambling and investing is ultimately control. By gambling your money, you have handed over control of it. And in stock exchange controlling is your wish. It is not completely based on your hope. By investing, you are charged with the responsibility of learning which stock or security will best manage your money in a manner consistent with your stated preference. You can change your decision any time after taking it. Diversification is the tool you can use to earn with minimum risk and maximum return.

But remember it will take your time initially. After one stage when your stocks starts growing your time invested at initial stage will be divided. It is like investing in a business where your initial investment may be high but after a period of time it will give you more return than gambling.

Summary

·        The basics of the stock market are not complicated at all.

·        Financial language should not be scary. It can be learned as you trade in market. But at initial stage you should KISS. (keep is simple and safe)

·        Investment options exist for people of any income level. There is no monopoly is stock exchange. the more you learn the more you gain. But again the thumb rule is KISS (keep is simple and safe).

·        The market is a safe place and it is rising consistently. Crash is one part of the market but it is not as bigger as the growth. Stock market is stable place to put your money.

·        The stock market is not a game of chance, its game of knowledge, game of learning and game of decision making. Anyone can do it. It needs time and if you do not have time for it, you have many advisors available for your help anytime. (One of them is writing this article). I would say “when you do not know how to cook, you should know who the best cook is.”

·        The time required to manage your investments is very less compared to other business. ROI is much higher than any other business if you invest with proper way.

I would like to stop writing here, but I do not want you to stop thinking about your investment. It should be continuous process. Thinking about your investment is not tough thing. Do not make it complicated. Keep is simple and safe.

Bottom line is “Be a good KISSer and rule the world of investment”.  

And as usual my last word will be … ASTALAVISTA !!