“A goal without a plan is just a wish” said French writer Antoine de-Saint Exupery.
Individual goals vary at different life stages. Our short term goal can be buying a new car or a foreign holiday or setting up an emergency fund. A common mid to long term goal is buying a house while long term goals would be planning for your child’s college education and/or marriage as well as preparing for retirement. Defining your goals is the first step towards realizing them. The one investment option that will probably stand you in good stead in fulfilling all of these goals and reaching them in time would be investing in the stock market.
Stock market investments are usually seen as high risk, high profit investments but if you are prudent enough, the risk evens out over a long period of time. Stock investments are an active form of investment. If you have an adventurous and risk-taking disposition and good understanding of the stock markets, you can play around in the stock market for short term gains and make hay over a small period of time. In any case, if we listed the advantages of investing in stocks, liquidity would probably be right there at the top along with higher returns and better tax benefits. You are not charged for any capital gains for stocks held for more than a year. Though there is no thumb rule for calculating returns, but equity investments give the best returns compared to all other investment options.
If one were to come up with a mantra for making the most of your stock market investments, it would be “Give it time”. Stay patient, stay invested. It is not everybody’s cup of tea to be making profits of the stock market every other day. The stock market fluctuates and stock prices can really sway one way or the other and your ability to ride that wave will largely depend on your skills, experience and timing. Having said that, don’t just buy stocks and forget about them hoping that you’ve planted your seeds to reap a fortune later. The financial climate keeps changing and unless you prune, weed out and tend to your little investment garden, you may be disappointed or even shocked at what becomes of it.
Studying the market assiduously and understanding the trends while also gathering as much information as possible about not only the company but the industry you plan to invest in are proven ways of having a healthy and profitable investment. Remember, in stock markets (as much as anywhere else) – knowledge is power.