You are a beginner and want to try your hand in the market but not have sufficient fund?
To make a significant profit you need to invest a good sum of money. I know many of you don’t have the sum to invest at once and as a beginner, it is also very courageous to put a huge amount in one go.
This was exactly the same issue that I faced. As an Avg. income group how could someone manage to invest apart from the living expenses.
Not to worry ..there is a strategy for such group of people.
Steady accumulation strategy will help you to invest at regular interval of time and accumulate shares over a wide spread of time. This helps to reduce the risk of bad entry into the market and also helps to diversify their portfolio in the time horizon.
This can combine with all another type of strategies but not with momentum investing strategy which follows only the trend for investment
This strategy helps in accumulation of stock over a long period of time, investing every month and thus reducing the risk of bad entry. With this strategy, the stock price gets averaged out with the span of time making it more cheaper and also stabilizes the loss if any bad entry is made.
If you ever bought shares at once, there is higher chance that you may suffer bad entry loss, this risk gets eliminated with this strategy.
Using this strategy investors who buy stocks and then if prices fell will buy more stocks which will lower their Avg cost of purchase and in subsequent period will buy more and even though prices are high, it gets stabilized.
It is very hard for an investor to estimate market timing, with this strategy they eliminate the ups and down stress and risk associated with market timings.
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Are you the right person? Who should use this?
It is perfect for those who cannot afford to risk their capital at once. This strategy does require investment at once so reducing the load of purchasing capital.
It reducing risk and need not require one to master market timings which seem to be impossible for non-professional traders.
Also helpful for those who cannot make a huge investment at once and can afford little each month.
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- Improvises the investment technique by investing at regular interval of time.
- Eliminates the risk of bad market entry time.
- Need not require to fund huge capital at once
- Minor fluctuations in the market get stabilized with this strategy.
Regardless of which income group you belong, you can make an entry in the stock market with a variety of strategies that is most suitable for you.
This strategy is good till you have control over your emotions the greed to Avg out your purchase price and make lower than the previous buy let you invest more on falling stock. This can be risky unless you are sure enough that you have purchased the right stock.
This also increases your brokerage charge with each transaction you are giving brokerage to the broker which can be reduced if you could buy in one go.
All you need to remember is invest only that sum of money which you consider to be surplus, which is just in your bank account and is of no possible use in coming future.
Make sure you do not invest money that compromises your basic needs and always have a reserve balance for at least next 6 months for an emergency.
As it is very well said
“A wise man should have money in his head, but not in his heart”