At present time, only saving is not enough to survive. Today’s need is to invest your money in such a way which gives maximum in returns. And when we take the name of Invest and Investments, the first thing it strikes that is Stock Market. Stock market is the market for Risk Takers, MindGamers and Smart Workers.
Investment in stocks is a smart choice to utilize your money. Stock market is simply a buying and selling of shares in market depends on demand and supply of shares. The market will go upwards if there are demand of shares is more than supply of shares and go downwards if selling of shares is more and buying less or low demand.
The smart way to invest in the market is Diversify the Investment. Diversify means to invest your money in various shares, different markets. Diversification of Investment also helps to minimize the risk. If we invest our money in different shares it results in loss of one part can be settled by another slot of Investment.
Stock investing does not have to be complicated. For most people, stock market investing means choosing among these two investment types:
Stock mutual funds or exchange-traded funds: – These mutual funds let you purchase small pieces of many different stocks in a single transaction. Index funds and ETFs are a kind of mutual fund that track an index; for example, a Standard & Poor’s 500 fund replicates that index by buying the stock of the companies in it. When you invest in a fund, you also own small pieces of each of those companies. You can put several funds together to build a diversified portfolio. Note that stock mutual funds are also sometimes called equity mutual funds.
Individual stocks: – If you’re after a specific company, you can buy a single share or a few shares as a way to dip your toe into the stock-trading waters. Building a diversified portfolio out of many individual stocks is possible, but it takes a significant investment.
The upside of stock mutual funds is that they are inherently diversified, which lessens your risk. But they’re unlikely to rise in meteoric fashion as some individual stocks might. The upside of individual stocks is that a wise pick can pay off handsomely, but the odds that any individual stock will make you rich are exceedingly slim.
The answer to where to invest really comes down to two things: the time horizon for your goals, and how much risk you are willing to take.
Let’s tackle time horizon first: If you are investing for a far-off goal, like retirement, you should be invested primarily in stocks (again, we recommend you do that through mutual funds).
Investing in stocks will allow your money to grow and outpace inflation over time. As your goal gets closer, you can slowly start to dial back your stock allocation and add in more bonds, which are generally safer investments.
On the other hand, if you’re investing for a short-term goal — less than five years — you likely don’t want to be invested in stocks at all. Consider these short-term investments instead.
Finally, the other factor: risk tolerance. The stock market goes up and down, and if you’re prone to panicking when it does the latter, you’re better off investing slightly more conservatively, with a lighter allocation to stocks.