scorecardresearchHow to make money from the share market?

How to make money from the share market?

Updated: 24 Mar 2022, 04:12 PM IST

Although the goal to invest in the share market is clear, many people do not know how to effectively earn through their investment in the stock market. Read further to know what it takes to earn from the stock market.

To make money from the share market one should have appropriate understanding of the market in order to maximise their rewards while minimising risk.

To make money from the share market one should have appropriate understanding of the market in order to maximise their rewards while minimising risk.

Investors have always wanted to maximise their earnings from their investments in the stock market. However, it is vital to first understand how one can do that and then plan accordingly before investing the money.

Before digging further, let us first understand the key difference between trading and investment:

Difference between trading and investing

Investment is the process of buying securities of any company and holding those shares for a long time, preferably, in order to gain high returns. On the contrary, trading involves buying and selling stocks in the short term to earn immediate profits.

Investment involves minimum risks, given its long duration and it is also the consistent way to earn profits. Whereas, trading definitely demands traders to manage heavy risks efficiently.

Below are certain tips that any investor can consider to earn operatively from the stock market.

Practises to be exercised for good returns

First and foremost, any investor must learn about the functioning of the stock market thoroughly before investing in it. Then, they must decide upon the specific financial products that they would like to invest in. 

It is also advisable to maintain a diversified portfolio by investing in several financial products such as bonds, shares, mutual funds, etc., to minimise risks.

Second, the stock market is volatile in nature and immediate profits are not always assured. Owing to several factors like economic downturn, company’s growth and others, it is advisable to plan a long-term investment and reap healthy profits.

Third, the investors receive a portion of the company’s profit as a dividend. Thus, it becomes essential to believe in a company’s potential as it is the source of income for the investors. Do an appropriate background check on the company’s growth, market value and other factors.

Four, Apart from the selection of the right stocks, the investors must keep up with the news related to the stocks and their supply-demand channel.

Five, investors must make sure that they keep their trading costs minimum by avoiding frequent trades of their holdings.

Despite all these tips for earning regularly from the stock market, there is always uncertainty in the market and one cannot predict or expect anything from the market.

Thus, it is advisable for the investors to be equipped with sufficient knowledge about the share market to maximise their earnings and minimise the risk.

First Published: 14 Dec 2021, 05:16 PM IST