There have been numerous such companies that have given great returns to investors, like Reliance, Titan, Dr. Reddy Labs, etc. No one can predict which company would grow to such a huge levels before 30 years. Remember, for every Wipro like story, there are thousands of companies which has eroded investors wealth and become penny stocks. Investing in equities alone isn’t enough, investing in the right company at the right time is even more important.
Power Of Compound Interest
Even if someone invested in the best company in the world, its basic human psychology to book profits when the stock prices increase so many fold. Some investors don’t feel comfortable even for a 50% increase in their investment. No one would have the patience to hold such a stock when he sees how volatile the market is in short-term.
If you really want such phenomenal returns, you would have to do lot of fundamental research, do your due diligence on the company and invest in it when it’s in the early stages. Most important of all is, staying invested in the company for the really long-term to reap the entire benefits.
Well there is one more Do's & Don’t of Stock market Investing.
If you want to become a Crorepati by investing in stock market than Invest in fundamentally strong companies for long term, Don’t pull out your investments in the down market but add more stocks into your portfolio at cheaper price whenever the market goes down….. Hold your stocks for 1 or 2 decades. The reason for holding stocks for this much long is very scientific and logical. Any Business takes time to grow and it requires a full business cycle (7-10 years) to unlock the value of business. So more the Business cycles you allow to pass on, the more value unlocking of your stock and thus more profit to you………….
Most investors think that finding the right set of stocks is all there is to successful investing. But this is not the complete truth. Finding the right stocks is only the starting step. The real battle begins thereafter.
Many of you who have been investing in stocks for a long time will agree that at some point or the other you may have held great stocks that went up manifold; only that you sold them off a bit prematurely. So here is the real challenge for all investors - to do as little as possible.
In today's age of unprecedented information explosion, 24x7 news channels and mobile internet, it is impossible for people to not do anything at all. Every time you are exposed to a piece of information - stock price movement, news updates, etc. there is an immediate impulse to take a stand, to take a decision.
"...how will the Fed decision impact the markets?"
"...seems like the markets are about to correct sharply."
"The stock is up 50% in just 3 months... I guess I should book some profits."
"Should I sell now and buy the stocks later?"
"The quarterly results were below expectations. Is it time to exit the stock?"
This is a constant chatter going on inside the heads of most investors. What happens as a result - you miss out the big picture. You end up taking short-sighted decisions. And you miss the opportunity of creating the fortune of a lifetime.
And thus you can become a Crorepati………..
"I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years". - Warren Buffett
Comments
Post a Comment