Are you a young adult in your 20s new to the stock market?

If so, this article is for you... Advice for every beginner before entering the stock market by a certified expert!

People of our nation are becoming engaged in the stock market with the hope of making money and becoming wealthy quickly. However, if you are expecting a quick path to riches, you are mistaken. The key to success in stock market investing lies in compounding. The longer you stay invested, the higher your wealth will rise. As Albert Einstein famously said, “Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it”. Before starting your investing journey, here are some essential things that you should know.

1. Start Now: It is never too late to begin investing, but it is best to start as soon as possible. Investing your money will enable you to generate income from your capital. Though no one can guarantee the best time to start, investing is meant to provide rewards in the long term. The longer you wait to start, the more opportunity costs you miss out on. Even if the rabbit does start late, the tortoise will still win the race for wealth maximization in investing by staying in the game for a longer duration. Therefore, the earlier you begin investing, the better. 

2. Diversify Your Risks It is common to hear of tremendous successes by certain investors, giving the impression that it is possible to become a "king" or "queen" of the stock market. However, this is not the case for every stock choice. Those who have made huge returns do not usually advertise their unsuccessful investments. To avoid unrealistic expectations of high returns, it is best to keep investments straightforward by investing in index funds, mutual funds, ETFs, etc. These funds hold many varieties of units from different sectors of companies and help to spread the market risk. Diversification is the best way to reduce the risks associated with investing, which could be done by investing in various sectors to prevent the share prices from being affected by bad news.

3. Avoid Short-Term Trading & Use Simulators Before Real Trading When it comes to trading stocks, it involves buying and selling a security within a single day or in a short time frame. Unfortunately, studies suggest that most short-term traders fail to make profits due to psychological and tactical errors. Moreover, they have to bear high taxes and brokerage fees. If you are seeking short-term gains, it is prudent to invest in liquid funds or a high-yield savings account. To start trading successfully, it is advisable to build confidence in your strategies first. You can use stock market simulators to practice and gain assurance before investing your real money. 

4. Commitment & Top-Ups In order to ensure the most return on your investments, it is important to remain dedicated to your long-term portfolio. This requires that you be able to tolerate the fluctuations of the market for at least three to five years. Those who make the most money in the stock market are those who continually add to their investments. You can speed up the process of achieving your financial goals by setting aside part of your salary or business earnings to invest, and by automating the process with your broker or fund manager. By maintaining a strong commitment to your investments and making consistent contributions to purchase assets, you can make faster progress in the stock market. 

5. Be Prepared For Downfalls No one wants to lose money, especially when investing in the stock market. Despite its fluctuating nature, long-term investments can result in profitability. There may be losses during the first few years due to market volatility, but this should not frighten investors away from making sound decisions. For example, many investors panicked and sold off their shares during the Covid-19 market crash, leading to financial losses.

Lord Krishna's words from the Bhagavad Gita serve as a reminder to stay the course and not be swayed by fear:

|| कर्मण्र्म येवाधिकारस्तेमा फलेषुकदाचन | मा कर्मफलह र्म ेतर्भूु र्मा र्भू तेसङ्गोऽस्त्वकर्मणिर्म || 

This means: We have control over our actions, but not their outcomes. We should not allow the potential results to drive our actions, nor should we become attached to inaction. We should remain fearless and invest for a longer time period, which has yielded great results for investors. 

We always advise investors to buy when the market is full of fear and sell when people are greedy. Starting out in the stock market? Let us help you! Connect with us and we can help you with more information about stock markets and related courses.

Disclaimer: Investing in securities markets is subject to market risk. This is not investment advice. Any profit/loss incurred by someone shall be his/her sole responsibility. All the above-mentioned information is for learning purposes. All rights reserved.

Thank you so much for sparing your valuable time to read my article. Your support is greatly appreciated! 

Utkarsh Chhapchhade

yourinvestmentadvisorutkarsh@gmail.com