There are two contrasting opinions on stock market investing among common people:
- One section of people think stock market is pure gambling and you need luck to make money. These are also the people who think, stock investing cannot be a serious profession.
- Another section of people believe, stock market investment requires a lot of effort. Without putting a lot of time into studying balance sheets, profit & loss statements and annual reports, it’s impossible to make money.
From my experience, both of these aren’t true.
What you actually need are just two qualities:
One, interest to learn more about the stock market. And this doesn’t happen overnight. Developing interest takes time. Once you begin investing and start to take interest, you’ll learn more in the stock market than any other field in the world.
You’ll learn about different businesses and the successful people who run them. Soon, you’ll take interest in learning financials and chart reading (technical analysis). The ups and downs of the market will also help you better handle the ups and downs of life.
The other important quality that you need to have is common sense. Yes, common sense. As long as you take it slow and avoid blunders by investing only in high quality companies, you will do very well in the stock market.
Mistakes and losses are a part of the market, even after you learn a lot, you will still make mistakes. India’s most successful investor, Rakesh Jhunjhunwala is still making mistakes after 30 years in the market.
Even if you lose a little bit of money, it’s okay, you’ll make a lot more money in the future. Just don’t try to get super-rich in the first 2-3 years.
So my advice: Start your investing journey immediately. Open a demat account, invest small amount of money – even 1000-2000 rupees every month is enough to start. Keep your expectation low when it comes to returns. Track the companies where you are invested and spend time reading more about them.
Learning for 2 hours per week for 1-2 years is all it takes to get a fairly good understanding about the market. Consistency is very important here. You can’t put 8 hours per month instead of 2 hours per week. It has to be 2 hours every week for 12 months.
One hour per day for 5 days a week is even better. You’ll learn sooner. After the market ends, read on how the day went. Which stocks went up, which are those that went down. If a stock you own fell because of some news, read the news and try to understand what it means.
Feel the emotions that market puts you through. Learn to accept the ups and downs.
Fix a schedule for learning and stick to it. You’ll be surprised by how much you learn in just 1 or 2 years.