Share market is a bottomless ocean of money. This is the reason why even people who understand the stock market a little want to make big money from the stock market. Some people try to fulfill their dream of earning money from the stock market through intraday trading and end up incurring huge losses.
Do you know that till now the people who have made big money from the stock market have strictly followed some rules of the stock market. It is not that difficult to follow these rules, but in the greed of becoming rich very quickly, investors often make mistakes.
In today’s article “How to become rich from share market “ we will discuss those points of share market which due to not being taken seriously, people often end up incurring losses and miss out on making huge profits from the share market.
How To Become Rich Through Share Market
How to become rich from share market or How to become a millionaire from share market | It is very easy to become a millionaire through the share market, but the condition is that while keeping in mind the rules of investing in the share market, the following tips must also be kept in mind. People who invest in the stock market by following these rules get huge profits in a short time. But the problem is that in order to make quick money, people invest in high risky shares and end up incurring losses.
Investing in stock market is a better means of passive income. People in foreign countries are becoming rich by investing in the stock market, but in India, due to some misconceptions about the stock market, they are avoiding investing in the stock market. But now the time has come that we Indians should also invest in the stock market and become millionaires from the stock market. So come How to become rich from share market , we will discuss one by one some rules of investing in share market.
General Information About Stock Market
How to become rich through share market / Among the tips to become rich from share market, the first thing that comes first is to get basic information about share market. Before investing anything in the stock market, every aspect of the stock market should be studied in detail.
It is true that the share market is a bottomless ocean of money, but if you invest in the share market without studying the general information about the share market and without following the rules of investment, then you will definitely cause loss to yourself and the share market will be affected for good or bad. Saying goodbye to the world of stock market.
Basic information about share market Meaning of stock market indicators, company’s Fundamental analysis, company’s share Technical Analysis, Chart Analysis, What is PE Ratio, What is Support and Resistance in Stock Market, What is the best time to buy and sell shares in the stock market, Advance/Decline Ratio What is, Stop Loss What is, Dividend What is Portfolio, along with how to make it, there are many such points which you can understand to become a better owner of any company in the stock market.
Invest Money For Long Term
How to become rich through share market tips come second to stay invested in the share market for a long time. Whenever you like the fundamentals and technicalities of a company listed in the stock market and you want to invest in that company, then you should invest in that company for a long term. When you invest after looking at the fundamentals of a company, it means that you see the company’s business and future as good. You feel that the company’s business can grow rapidly in the coming days.
Now suppose that you have bought the shares of this company. Now, even if the company’s shares start falling due to bad market sentiment or any external news, you should not panic at all because you have bought the company’s shares after looking at the company’s fundamentals and not because of market sentiment or any external news.
When the company’s shares fall due to bad market sentiment or any external news, then you should not sell the company’s shares and buy around the support level. Long term investment does not mean one or two years. Long term investment is considered to mean 5 years or above.
When you buy shares of a company based on market sentiment or any news, then it is called trading and not investment. The impact of market sentiment or any news is for a short period of time, hence if you have taken any share on the basis of these then you should exit the trade after hitting the target or stop loss as per your technical analysis.
Invest When The Stock Market Falls
How to become rich through share market tips comes third in the list that one should invest in the share market during recession or decline. If you want to take good advantage of the growth of the stock market, then you should invest by buying shares of your favorite company even when the stock market is falling. When a company’s shares fall due to some bad sentiment, then when the market sentiment becomes good, the company’s shares start rising equally rapidly.
There are two types of decline in the shares of a company. The first decline occurs when the fundamentals of the company deteriorate. Fundamentals of the company mean the internal problems of the company. The second decline occurs when due to some external reason the company’s profit is affected or there is a possibility that the profit will be affected, even then the share prices of the company fall.
When the company’s shares are falling due to poor fundamentals of the company, then one should not invest in the company’s shares. But when the company’s shares are falling due to some external reasons or the reason for the decline is temporary, then it is appropriate to invest in the company’s shares.
Studying the management of any company, financial condition of the company, fair value of shares, future plans of the company, balance sheet, financial statement, business model of the company along with the future growth of the company is called fundamental analysis of that company.
Big Investment In Big Company And Small Investment In Small Company
How to become rich from share market / Among the tips to become rich from share market, it comes fourth in the list of making big investments in big companies and small investments in small companies. There are all types of companies in the stock market, small, medium and big. The smaller a company is, the riskier it is. The bigger and blue chip the company, the less risk it has.
There is big risk in a small company but when the market is fast it gives manifold returns in a short time. The companies which are of medium size have medium risk, that is, the risk is less than that of a small company and more than that of a big company. Similarly, these mid cap companies get less returns than small cap companies but they get more returns than large cap companies.
Returns are less in large cap companies but the risk is also minimal. Volatility is more in a small company. If you invest maximum of your portfolio in these small companies then your portfolio will also become more volatile. In such a situation, whenever there is a recession in the market, there is a big decline in your portfolio.
For this reason, it is advised by big investors and experienced people that new investors should invest 55 to 60 percent of their portfolio in large cap companies. 30 to 35 percent should be invested in mid cap companies and 10 to 15 percent should be invested in small cap companies.
But most of the new investors invest maximum of their investment in small cap or high risky companies in order to earn more profit in less time. As a result, they get huge returns when the market is bullish, but when there is a recession in the market or when there is some bad news related to the company, then your portfolio starts falling rapidly. In such a situation, the morale of the investors gets broken and they start thinking of exiting the stock market.
Invest In Fast Growing Companies
How to become rich through share market / Investing in a growing company comes at number five in the tips to become rich through share market. More than 5000 company shares are listed in the stock market. Some companies are big, some are small. Some companies register a growth of 5 to 10 percent while some register more than 60 percent growth in sales and profits. Generally only small and small cap companies are able to register more than 60 percent growth. But some large cap and mid cap companies are growing better than their peers.
The share of a company whose profit grows faster increases equally. Therefore, we should invest in such a company which is a leader in its sector and has good growth. Like – Titan Company, Bajaj Finance, Polycab, Deepak Nitrate, Astral Limited etc. There are some companies in the stock market whose sector is growing but the profit or sales of the company is not growing. One should avoid investing in such companies. Like – Wipro, etc.
Avoid Investing In The Crowd
How to become rich from share market ,At number six among the tips comes avoiding investing in the crowd. The world’s great investor Warren Buffett Sir says that a wise investor does not try to catch a running stock. A wise investor waits for a fall in the stock market. As soon as the sentiment of a good company or the market mood turns bad, investors gradually start investing in the shares of the company.
When the shares of a company go up rapidly, then after some time profit booking is also done in the shares of the company. When the company’s shares reach its support level after profit booking, then you should gradually start investing in the company’s shares.
Invest After Analyzing The Valuation
How to become rich from share market / Investing after analyzing the correct valuation of the company comes at number seven among the tips to become rich from share market. You must have noticed that the PE ratio of some companies is around 10, yet the shares of the company do not rise. But the PE ratio of some companies is more than 100, but the shares of these companies remain bullish. The reason for this is the valuation of those companies. Actually, the stock market operates by deciding the valuation of all the companies according to their growth.
Generally, the market gives good valuation to companies whose profit and sales growth are consistent (growing year after year), but the market gives relatively low valuation to those companies whose profit and sales growth are not consistent. |
For example, Vedanta is a big company listed in the stock market which does its business in the field of mining. It has a bicycle. Therefore, sometimes the profit of the company goes up very rapidly and sometimes the profit of this company falls down very rapidly. Another company is D-mart which is continuously increasing its revenue and profit. This is the reason why Vedanta’s PE ratio is around 10 and D-mart’s PE is working around 100.
When you study valuation in any book or pdf, you are told that you should buy shares with cheap valuation. But this is not correct. You have to see how the sales and growth of the company you have chosen is. If the sales and profits of that company are continuously growing then that company will have a higher PE ratio and such a company will continue to grow.
FAQ
How to become rich from share market ?
By following the following tips for investing in the share market, you can make big money from the share market.
1) Get general information about the stock market
2) Invest money for long term 3) Invest when the stock market falls. 4) Invest big in big company and small in small company 5) Invest in a fast growing company 6) Avoid investing in the crowd 7) Invest after analyzing the valuation.
Can I start a stock market with rs.500 ?
Yes sir, you can work in share market with Rs 500. Some shares are available in the stock market at a price of Re 1 or even less. You can invest in those companies or can also trade in futures and options with Rs 500. If you believe me, if you have come to the stock market with the intention of investing, then you should start investing with at least Rs 50 thousand.
When to invest in stock market ?
If you want to take good advantage of the growth of the stock market, then you should invest by buying shares of your favorite company even when the stock market is falling. When a company’s shares fall due to some bad sentiment, then when the market sentiment becomes good, the company’s shares start rising equally rapidly.
Which company is right to invest ?
The share of a company whose profit grows faster increases equally. Therefore, we should invest in such a company which is a leader in its sector and has good growth. Like – Titan Company, Bajaj Finance, Polycab, Deepak Nitrate, Astral Limited etc. There are some companies in the stock market whose sector is growing but the profit or sales of the company is not growing. One should avoid investing in such companies. Like – Wipro, etc.
For how long you should invest in stock market ?
Investing in the shares of any company should be done for the long term. Long term investment does not mean one or two years. Long term investment is considered to mean 5 years or above. When the company’s shares fall due to bad market sentiment or any external news, then you should not sell the company’s shares and buy around the support level.
What to do if the stock market fails ?
If you have bought shares of those companies which are fundamentally good, then you should not panic at all but should look for investment opportunities in case of market decline. When a company’s shares fall due to some bad sentiment, then when the market sentiment becomes good, the company’s shares start rising equally rapidly. When the company’s shares are falling due to poor fundamentals of the company, then one should not invest in the company’s shares. But when the company’s shares are falling due to some external reasons or the reason for the decline is temporary, then it is appropriate to invest in the company’s shares.
Can one become rich from share market ?
You can become absolutely rich. If you follow the above rules and keep investing wisely in the stock market in SIP mode, then you can definitely become rich. Before investing in the stock market, it is very important to do technical analysis and fundamental analysis.