Here's what we suggest you do when the bulls and bears kick up a lot of dust.
What should I do next?
This is a question that perhaps every equity investor has asked themselves many times in the last few months. With the stock market touching the heights before gravity moves forward, it is easy to get nervous or over-excited.
What you shouldn't do
1. Do not panic
The market is unstable. accept that. There will be ups and downs in it. Do not panic.
If your stock prices have dropped, there is no reason to get rid of them in a hurry. If nothing has changed about your company then stay invested.
Ditto with your mutual fund. Does the net asset value dip dipping and then rising slightly? Wait. Do not sell unnecessarily.
2. Do not invest heavily
When the market declines, go ahead and buy some stocks. But do not invest in huge amounts. Step up the shares.
Put some money aside and zero in on the companies you believe in.
Buy them when the market sinks. When the market falls again, you can pick up some more. Keep buying shares from time to time.
Everyone knows that they should buy when the market has reached its lowest level and sell the shares when the market peaks. But the fact is, no one can time the market.
It is impossible for a person to tell when the share price has reached rock bottom. Instead, buy shares over a period of time; In this way, you will average your costs.
Select a few stocks and invest slowly in them.
Ditto with mutual funds. Invest in small amounts gradually through a systematic investment plan. Here, you invest a fixed amount in your fund every month and you are allotted units.
3. Do not chase performance
The stock does not become a good buy simply because its price is rising unprecedentedly. Once investors start selling, the price will fall drastically.
Ditto with mutual funds. Each fund will show excellent returns in the current bull run. Which does not make it a good fund? Track the fund's performance on a bull and bear market; Only then make your choice.
4. Do not ignore expenses
When you buy and sell shares, you will have to pay brokerage fees and securities transaction tax. If you are selling for a small profit (where the price of the stock has increased by a few rupees) it can look into your profits.
With mutual funds, if you have already paid the entry load, you might not have to pay the exit load. The entry load and exit load are charges levied on the net asset value (the price of one unit of the fund). An exit load is applied to the exit load when you buy the units and when you sell them.
If you sell your shares of equity funds within one year of purchase, you pay a short-term capital gains tax of 10% on your profit. If you sell after one year, you pay no tax (long term capital gains tax is zero).
What should you do
1. Get rid of junk
Any shares you've bought but don't want to keep now? If they are showing a profit, then you can consider selling them. Even if they are not going to give you enough profit, it is time to dump them and use the money elsewhere if you no longer believe them.
Likewise with the Dud Fund; Sell units and deploy money in more fruitful investments.
2. Variety
Do not buy stocks in just one sector. Ensure that you are putting resources into stocks from various parts.
Also, when you look at your total equity investment, don't just look at the stock. See also equity funds.
To balance your equity investment, invest a portion of your investment in fixed income instruments such as public provident funds, post office deposits, bonds, and national savings certificates.
If you do not have any or very few investments, consider a balanced fund or debt fund.
3. Trust Your Investment
Do not invest in stocks on a tip basis, no matter who gives it to you.
Tread carefully Invest in stocks that you truly believe in. Look at the core principles. Analyze the company and ask yourself if you want to be a part of it.
Are you happy with the way a particular fund manager manages his fund and the purpose of the fund? If yes, then consider investing in it.
4. Stick to Your Strategy
If you have decided that you want only 60% of all your investments in equity, do not cross that limit because the stock market is yielding spectacular returns.
Stick to your allocation.
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| Do and don'ts for Stock Market Trading & Investments |
Here we suggest you when bulls and bears blow too much dust.
What should I do next?
This is a question that perhaps every equity investor has asked themselves many times in the last few months. With the stock market touching the heights before gravity moves forward, it is easy to get nervous or over-excited.
What you shouldn't do
1. Do not panic
The market is unstable. accept that. There will be ups and downs in it. Do not panic.
If your stock prices have dropped, there is no reason to get rid of them in a hurry. If nothing has changed about your company then stay invested.
Ditto with your mutual fund. Does the net asset value dip dipping and then rising slightly? Wait. Do not sell unnecessarily.
2. Do not invest heavily
When the market declines, go ahead and buy some stocks. But do not invest in huge amounts. Step up the shares.
Put some money aside and zero in on the companies you believe in.
Buy them when the market sinks. When the market falls again, you can pick up some more. Keep buying shares from time to time.
Everyone knows that they should buy when the market has reached its lowest level and sell the shares when the market peaks. But the fact is, no one can time the market.
It is impossible for a person to tell when the share price has reached rock bottom. Instead, buy shares over a period of time; In this way, you will average your costs.
Select a few stocks and invest slowly in them.
Ditto with mutual funds. Invest in small amounts gradually through a systematic investment plan. Here, you invest a fixed amount in your fund every month and you are allotted units.
3. Do not chase performance
The stock does not become a good buy simply because its price is rising unprecedentedly. Once investors start selling, the price will fall drastically.
Ditto with mutual funds. Each fund will show excellent returns in the current bull run. Which does not make it a good fund? Track the fund's performance on a bull and bear market; Only then make your choice.
4. Do not ignore expenses
When you buy and sell shares, you will have to pay brokerage fees and securities transaction tax. If you are selling for a small profit (where the price of the stock has increased by a few rupees) it can look into your profits.
With mutual funds, if you have already paid the entry load, you might not have to pay the exit load. The entry load and exit load are charges levied on the net asset value (the price of one unit of the fund). An exit load is applied to the exit load when you buy the units and when you sell them.
If you sell your shares of equity funds within one year of purchase, you pay a short-term capital gains tax of 10% on your profit. If you sell after one year, you pay no tax (long term capital gains tax is zero).
What should you do
1. Get rid of junk
Any shares you've bought but don't want to keep now? If they are showing a profit, then you can consider selling them. Even if they are not going to give you enough profit, it is time to dump them and use the money elsewhere if you no longer believe them.
Likewise with the Dud Fund; Sell units and deploy money in more fruitful investments.
2. Variety
Do not buy stocks in just one sector. Ensure that you are putting resources into stocks from various parts.
Also, when you look at your total equity investment, don't just look at the stock. See also equity funds.
To balance your equity investment, invest a portion of your investment in fixed income instruments such as public provident funds, post office deposits, bonds, and national savings certificates.
If you do not have any or very few investments, consider a balanced fund or debt fund.
3. Trust Your Investment
Do not invest in stocks on a tip basis, no matter who gives it to you.
Tread carefully Invest in stocks that you truly believe in. Look at the core principles. Analyze the company and ask yourself if you want to be a part of it.
Are you happy with the way a particular fund manager manages his fund and the purpose of the fund? If yes, then consider investing in it.
4. Stick to Your Strategy
If you have decided that you want only 60% of all your investments in equity, do not cross that limit because the stock market is yielding spectacular returns.
Stick to your allocation.
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