How to Invest in Stocks Market in 2020 -

15 Steps Procedure Guide

Table Of Contents
​
Introduction:

Why You must invest in Stock Markets?

Step 1: Determine Your Financial Goals:
Step 2 Keep Some Savings Aside:
Understand Your Risk Tolerance:
Step 4 Control Your Emotions and Only Take Analytical decisions

How to get Idea of How Stock Market Functions:

Step 5 Start Playing Stock Market simulations (Stock Market Games).
Step 6 Start Investing in Mutual Funds or ETF’s (Exchange Traded Funds)
Step 7 Start investing through Index Funds:
Step 8 Use the Dollar Cost Averaging Strategy:

Start investing in individual stocks gradually:

Step 9 Use ROBOT Advisors:
Step 10 Register yourself with a Low-Cost online stockbroker:
Step 11 Try to build a diversified Portfolio:

You must avoid while investing:

Step 12 Avoid Borrowing for investing:
Step 13 Avoid listening to stock predictions every second:
Step 14 Having Good investment Discipline Realistic Expectations is a must
Step 15 Monitoring Your Portfolio behavior for Social-Political Situations across the world:

Here are some considerations you must look into:

Conclusion:
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Introduction:

This article “How to Invest In Stock Markets” is a kind of Hand Book or a Rule Book that
you can keep with you while investing.

If you are new to Stock Market Investing, Then Stock markets seem a bit intimidating to
you. Stock Market investments are not like your normal investments where whether you
gain or lose, But nothing will happen to your principal amount. In Stock Markets there
are both possibilities that you are either gaining or losing the profits or even the
principal. You have to have some skills techniques and a set of rules while investing in
stock trading.

In this article, “How to Invest In Stock” we are going to discuss “How we should
Approach Investing in Stocks”. We guide you with “15 steps you should follow to
become a successful stock market investor”.

Why You must invest in Stock Markets?

As numbers are suggesting in the 2020 Stock Market investment is the best investment
option available to generate more profits on your hard-earned money. The longer you
keep the money in the market the higher your income will be. Earlier markets grown at
unprecedented rates so the people who invested also earned huge amounts by the time
they withdraw from the markets. But now all companies are not growing at that kind of
rate only a few are growing. So your fortune lies in your knowledge of finding those few
companies.

By the end of this guide, you will know How to Invest In Stock markets in 2020, which is
better than a beginner. If you want to become an expert then read all our upcoming
blogs on this topic. With that being said we will follow into actual steps you need to
follow.

Step 1: Determine Your Financial Goals:

Before you decide to invest in stock markets you must be aware of your financial goals
and your current financial situation. This will help you make great plans for your financial
future.

To get clarity regarding your financial goals you must ask these questions to yourself.

Why you want to invest?, What is the purpose?

What is your final target amount for the investment that you have put in?
Are you investing this money for shorter periods or is it a long term investment?

These 3 Questions will give you a perspective about your goals in the stock market
investment. This will also help you to shape your plans for your future investments.

Long term investments always suggestible from my side but if you want to make the
stock market as your full time earning source then, of course, you have to go with both
long term and short term ​investment options.

Step 2 Keep Some Savings Aside:

Of course, as I have suggested in my previous blogs that savings is a highly unlikely

option for the money to grow against inflation, But taking a risk where you will put your
entire money is a dumb decision to make. So make sure to have some savings in your
Portfolio​. These savings will come to your rescue you in times of crisis.
Investing in stock markets is on the peak of the risky mountain, no matter how many
precautions you take there will be some bad times when Luck won’t be on your side. So
making sure that you will have a great amount of savings in the best possible savings
option, like ​Fixed Deposit​ account, is the must before you step into the stock market.

Talking about Fixed Deposits: Here are the ​Fixed Deposit Rates in 2020​ ​Click Here

Understand Your Risk Tolerance:

You need to understand your self well, this is essential no matter what you are doing.
When it comes to Stock Market Investments you must understand your risk tolerance
limit so that you will not exceed that limit.

The simplest definition of risk tolerance is “ How much risk your mind willing to take
regarding your investments, loses, and emotional balance”. Risk doesn’t only mean
financial risk but also the mental risk as well.

You must always remember that you are earning to live, you are not living to earn.

One of the biggest challenges faced by stock investors is “understanding of their risk
tolerance limit”. You must shape your investment portfolio based on your level of risk
tolerance where you will feel comfortable.

For those whose risk tolerance levels are too low, they need to restrain from the high
risk-high returns investment options such as equity investments, and they can go with
debt-based investments which are comparatively less risky.

People who are strong in stock investments, will always retain their calm in times of
financial improbabilities and follow Analytic decision process perpetually well and come
out of them quickly.

Step 4 Control Your Emotions and Only Take Analytical decisions

The Most unfortunate things often happen to people in the stock market people are not
being able to control one’s emotions and think logically. There will be a lot of
fluctuations that you are going to experience when you start investing in stock markets.
You must stay calm and composed in all kinds of situations.

This will happen in stock markets very commonly because companies will release their
results now and then. If the majority of people feel bad about a company then its stocks
will fall and if the majority feel good about a companies results then the stock price will
go up.

Essentially all these short term fluctuations are happening because of people’s
subjective thinking, most of the time this will be wrong. So people are losing money
often who follow these trends.

A person who feels negative about a company is represented by a “Bear” and a person
who feels Positive about a company is represented by a “Bull”. During market hours
there will be a battle happening between Bulls and Bears which will result in how the
prices fluctuate during market hours.

There will be lots of other reasons for these Fluctuations those are as follows:
Speculations, Rumors If a big face in the market sells off all his shares in a particular
company that will show a huge effect on that company as well.

You must be stayed protected emotionally from all these negative short term things by
keeping your calm and focus on your decisions only. Trust only reliable sources in the
market and take decisions only by logical thinking. You must also know how to analyze
a company’s future possibilities.

How to get Idea of How Stock Market Functions:

All the above steps are regarding the precautions and prerequisites that you must take
or know before you start investing in Stock Markets. From this step onwards we are
going to dive into the actual steps that you need to follow while starting investments.

Step 5 Start Playing Stock Market simulations (Stock Market Games).

There are Stock Market Stimulation Games Out there on the internet which will give you
some Fake Digital Cash to invest in stock markets and get the experience of how the
stock exchange works and how you must approach stocks and analyze them. These
are very cool to play as they share with you the live updates in the stock markets,
essentially these will give you greater experience.

While playing these games you must be true and honest to yourself. You must follow all
the steps that you follow when you are investing really.

You can download entire content in this “How to Invest In Stock” Blog as a PDF and
keep it as your handbook.

Step 6 Start Investing in Mutual Funds or ETF’s (Exchange Traded Funds)

It is suggestible for jobholders and beginners of stock market investors that to start
investing in ​Mutual Funds​, ETF’s in the beginning and then move on to your Stock
markets.

I am saying your stock market investments intentionally because I consider Mutual

Funds also as stock market investments. In mutual funds, you mutually hire a fund
manager with other and the fund manager will take care of your fund and invest the fund
according to his scientific research.

Here you need not worry regarding the Diversification of your funds. So that you can get
on your life normally.

While investing in Mutual Funds do research on particular fund companies and analyze
them with your knowledge that you gathered till now. You must choose a good fund
manager to invest in Mutual Funds.

Step 7 Start investing through Index Funds:

Stock market index means the top-performing companies in the particular stock
exchange, these are all high revenue companies so that the loose or profit of these
companies will reflect on the entire market value.
Index funds are also stock traded funds and you need stock market knowledge for these
investments as well but these are not as risky as to invest in Individual non-index funds.

1900 companies are listed I Index stocks in New York Stock Exchange. These 1900
stocks are known as Index fund of the New York Stock Exchange. These stocks will
determine the performance of the NYSE. In the Bombay Stock Exchange(BSE) 30
companies are listed in an index fund and 50 Companies are listed on National Stock
Exchange. That’s why it is called as NIFTY50.

Index funds are highly secured and less likely to get loses and if you get profits also
those are in very small amounts compared to other individual stocks.

Step 8 Use the Dollar Cost Averaging Strategy:

Dollar-Cost Averaging is a strategy in stock markets used by investors to avoid buying

stocks at bulk at high costs. This means while investing in your index funds you must
not invest $10000 at once but invest small individual amounts let’s say $100 regularly
so that you will avoid buying a particular stock at higher prices. This will help you not
lose a high amount of money.

This strategy will also work for ETFs and Individual Stocks But while investing in Index
funds you must follow this strategy because the stock values in index funds always are
at high amounts.

Start investing in individual stocks gradually:

Step 9 Use ROBOT Advisors:

As you are very new to the stock market investments it is suggestible to start with Robot
advisors. These tools use computer algorithms to suggests their clients a better portfolio
combination. This will decrease the risk of investing in individual stocks.

You can instruct your fund, Risk tolerance to the Advisor ad it will do the rest of all for
you. Usually in Exchange Traded funds, You don’t get to chose individual funds so
these tools come to help you do that. As ETFs are less risky there is no reason not to
use a computer here.

Step 10 Register yourself with a Low-Cost online stockbroker:

If you want a hands-on experience now and no longer want to invest through safe but
less profitable methods ( if so it is a great decision ), Then trading through a stockbroker
will be a better choice. Here you will get chose where to invest and no one will interfere
with your decisions but you have to make sure your decisions are logical, Mathematical.

Usually, online stock barkers will charge not only the maintenance fee but also a
commission on every trade you do. So using a low-cost online stock brokerage website
will come into your help as you are a beginner.

Step 11 Try to build a diversified Portfolio:

A ​Portfolio​ is a basket where you will put all different kinds of stock or normal
investments. Building a diversified portfolio is a must for you to achieve more and lose
less. It is not at all important how much good companies you are investing your money
is in but it is important that how much diversified all your investments are.

This is of course for a simple reason if you ever lost your profits by 40% of your
investments at least you will be left with another 60% profit-making investments. This
will save you from losing your entire principal. People who don’t know how to build a
portfolio will eventually be going to lose money, and this is happening in stock markets.

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You must avoid while investing:

Step 12 Avoid Borrowing for investing:

You must avoid borrowing money for investing in stock markets. Stock markets are an
extremely uncertain investment option there are a lot of improbabilities in day to day
prices so borrowing money for investing in short time investments is a bad decision.

Let me give an example here

If you decided to buy 100 shares of any company with $100 then your brokerage firm
will offer you $50 of loan where you need to pay a reasonable interest rate. After you
traded the money let’s say your share value increased 100% and you got a profit of
100% now from the $200 of your income you will pay $50 + interest to your borrower
and you will then left with $130 which s still 260% profit for your original investment.

This will all sound great when you get profits in one day try to think of the other side of
the coin where you will lose your principle.

So don’t try to borrow money to invest at least when you don’t have enough experience
in doing so. This will make you suffer badly.

Step 13 Avoid listening to stock predictions every second:

This will buy a lot of your time and distract your concentration from investing in a good
investment option. You must concentrate on investing in a good investment option
rather than following the concept of “Buy low, sell high”.

So many people in the investors' community have lost their money by following this
concept. This doesn’t mean they lost their principle, but they lost their scope of getting
more profits than what they got.

Let me explain:
Imagine that you are following this “Buy Low and Sell High” concept. Usually, this
concept will be followed in day trading where you will think what you are seeing now is
high but it is not. As you don’t invest your time to calculate the possibilities of a
particular share. It is quite possible that after you sell the stock value will skyrocket so
you will lose the chance of getting more profit. It is also quite possible that you will lose
your money because when you buy a stock that would not be the lowest price point.

It is always suggestible to invest some time in analyzing the companies prospects and
possibilities, to invest. Always follow your set of rules and make sure to listen to your
trusted monitors.

Step 14 Having Good investment Discipline Realistic Expectations is a

must

Always try to have some realistic expectations. Having goals is a must for an investor
but having them to be realistic is essential. Otherwise, you may lose fortunes in the
journey.

Having a good investment discipline is a must, A lot of successful investors in the stock
markets also distracted out of their disciplined approach and panicked but came to
conscious very quickly which saved them a lot of times. Doing good research, having
realistic expectations and holding on to your guts will pay you off at least in the long run

Step 15 Monitoring Your Portfolio behavior for Social-Political Situations

across the world:

You must know what are the factors that will affect stock markets heavily then only you
will pay attention to important events all across the world. According to this knowledge,
you can immediately take your investment decisions wisely.

Here are some considerations you must look into:

1. Make sure that you will have a study income and also doesn’t have
overwhelmingly huge debt if that is the case you may want to pay off your debt
before investing your money.
 2. We must also consider our family situations before start investing in stock
markets especially because you need a lot of concentration and emotional
balance to invest and get good results in stock markets.

Conclusion:

Investing in stock markets is a great choice as Stock market investments are proved to
be delivering huge profits and asset values. Investing in stock markets is suggestible for
those who can put some hard work, invest time, and committed to being emotionally
balanced. The magic of compounding is the greatest business idea ever build if you
allow it to happen naturally in safer ways then it will get you fortunes that you are
aspiring for.

The younger you start investing the better results you will get.

Keep this in mind “In Businesses big things won’t happen in one night but in Stock
Market investments big things can happen in single night” so stay prepared and stay
awake.

I Hope this article did help you in figuring out your future in investments sector for “How
to Invest In Stock”
Greetings for fellow investors from PVS Karthik (Author at thravit.com0

Here Is Our Knowledge regarding Investments:

1. The Stock Market in India – A Beginners Guide

2. what is a mutual fund – A Beginners Guide
3. What is a fixed deposit – A Beginners Guide 
4. Investment options for beginners 
5. Recession Definition, Recession Indicators, Different Types of 
Recession and their Effects. 
6. 5 Precautions for Coronavirus Recession 2020 
 7. Economy Definition – What is Economy, Explained:

These are some of our Blogs that you will definitely like to read.

Credits: thravit.com
Author: PVS Karthik

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