How to make money from share market

Even you know everything about the share market but still it is very hard to make money in share market.

When you have a demat account and you know how to buy and sell the shares. The first thing which everybody try is to get rich as soon as possible. To do that you buy the share in hurry with some advice got from TV channel or agencies and you loose money. Here I give you some tips how to make money from share market.

You are afraid that you don’t miss the chance but when you bought the share, now you are afraid again that you don’t sell in red. This will continue until you make several transaction. In the end you will realize that you did not made money but your broker did. Because you were just paying the brokerage for each transaction and you got nothing in buying and selling.

There are some rules to make money from the share market. These rules differ from person to person. I have some fix set of rules which I have made for my self after years of experience in share market.

1. Never trust on anybody except yourselves: When it comes to buy the share never listen to anybody. Others opinion should not impact on you opinion. There is lot of noise out there tv channels, blogs, forums, friends, neighbors everyone and everywhere is giving suggestions but when you make the loss no one will be there to take ownership. It was your decision to buy the share and it is your loss but yes your decision of buying this share was definitely impacted by the advice.

2. Buy the shares for long term: What mistake most people make is that they buy the share for short term. No one knows what is going happen tomorrow. People who made money from share market all are long term investors. People who made short term transaction are unknown and there is no example is set by them. So my advise is, don’t trade in the share market, learn how to invest.

Warren Buffet said “Someone sitting in the shade today because someone planted the tree a long time ago”

There are numerous stories of people to made the investment year ago in the right company and now they are rich. Don’t forget to review the companies performance quarterly and yearly. Company can perform bad for two-three quarter but if it is not improving over multiple years then you need to re-think.

3. Become Opportunist: To make money from the share market you must see the opportunities coming to your way. That can be global conflicts, economic slowdowns, trade agreements, technology changes or fast growing capabilities withing the country. These opportunities offer you chance to invest your money and multiply it over the time.

4. Only invest money that you don’t need in near future: Before starting investment you must prepare yourself to tackle unwilling situation. You must preserve some fund that you can utilize in such situation. The remaining money you can invest in the share market so that if market is volatile then you can stay invested.

5. Invest in the company only if you know everything about the business: People usually buy share but they even don’t know the business of company. Tomorrow if any fraud happens they loose all their money at once. Investigate about the business and make sure that you will make money through this business. Review the company books of previous 5 years and try to understand the balance sheet, cash flow and P&L. Even you are not from the account background but still you can learn some basic fundamental. If company is making profit through this business from last 5 year and you see the growth in this business then company will definitely make money in future.

These are 5 five very basic principals that you must know before starting investment. Don’t be in hurry to become rich in share market. Your expectations from the share market should be realistic. Whatever you expect that will be fulfilled. Now you need to put more focus on economic activities and learn how economy works.

17 thoughts on “How to make money from share market

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