In today’s marketplace with a plethora of investment opinions to choose from, an investor often looses sight of his financial goals in lure of making temporary gains and ends up taking decisions which are contrary to his long term financial well being. So does that mean that one should stop investing and stay away from the markets?

The answer is no. The fact is nobody can time an entry to stock markets to perfection. You are never going to buy at the very bottom and sell at the top. But that should not deter you from investing in the Stock Market. Rather an excellent way of taking part is by doing long-term investments. This removes the stress of timing the market on a daily or intra-day basis, because it’s the average price per unit over time that determines your overall return in a long-term investment.

In order to make these long-term investments you need to equip yourself with the working knowledge of what drives the market. For e.g. before investing in a stock of a particular company you should have some basic understanding about how to evaluate the financial strength of the company based on its financial statements. You should be able to judge whether the current price of the company justifies the fundamentals and the price relative to its peers. Fundamental Analysis will enable you to analyze the markets by researching the fundamental information available in the market.

A word of caution before you take your investment decisions
Before plunging into the stock markets you should formulate your financial goals. Often the financial objectives are governed by one’s personal profile like risk tolerance, return objectives, time horizon, etc. When choosing a particular investment you need to ask yourself whether that particular product is compatible with your own personal profile.

If you are conservative then for you preservation of the capital invested is paramount, even if it means compromising on the returns.

If you are balanced, then you wish to strike a balance between high-risk and low-risk investments.

If you are aggressive, then you do not wish to compromise at all on the returns, even if you risk capital erosion.

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