Pros and cons of investing in stock market

The stock market is unpredictable and understanding the stock market is key for investors, who want to buy and sell stocks. Similarly, you can earn more money if you invest in the share market provided you are ready to take risks and at the same time act wisely by investing and selling the shares at the right time.

Hyderabad:The stock market is unpredictable and we can witness short-term fluctuations over and over again. To invest in the stocks we should start understanding the market and be prepared to withstand the fluctuations. This is what we as investors need to do. When we think about investments when the indices are advancing and we have to deal with the regression in the same way. Only then do we earn profits from investments.

When you decide to invest, it is important to keep in mind that there is a possibility of a 10-20 per cent correction per year. Then there will be no trouble. Keep calculating the value of your investment. Make sure not to exceed 80 per cent of inequities. Diversify the remaining amount into debt funds. Always link the value of the investment with this standard estimate. This allows you to coordinate temporary fluctuations and funding allocation should be based on your ability to bear the loss.

Stock markets have risen significantly over the past two years. Against this background, the value of your equity investment is likely to remain 5 -10 per cent higher in your portfolio. There is uncertainty in the markets right now. Keeping this in mind, it is a good time to adjust your investment. You should invest in companies that are performing well and try to bring equity investments up to the standard you want.

Suppose the performance of equity markets is expected to improve over the coming year. Then equity investments are positive. At this point, you need to keep investing. If the performance of the stock market is not good and if the news comes that there will be a bear market .. do not panic. If the market indexes fall by 10 per cent, investments should be brought in from the debt into equities. Since the equity ratio is high when the stock market rises, steps should be taken to limit investments to 80 per cent.

Estimating the performance of equity markets in the short term can be a daunting task. Every investment should be linked to your goal. Once the plan is fully formed .. it should be implemented. When investing in the market one should control the emotions like fear, greed and anxiety and make consistent decisions, says Arun Kumar, Head of Research, Funds India.

Read: Are mutual funds better than stock investment?