Losing money in stock market trading is common but when I come across heavy losers, I write in my blog.
Read this whatsapp chat:
Yes I feel bad when someone says he/she lost money trading the stock markets. Well if you start a business without knowing the ins and outs of the business you are sure to lose money. But thne somewhere sense should prevail. You must stop trading and start researching.
Not investing in stock markets is also a big loss. A Fixed Deposit in bank fetches a mere 6% annual return a year. If you bring inflation into account you are just making 1% return a year. So its not a loss but neither any profit. Therefore investing in stock markets is important but you must know what you are doing – DO NOT INVEST BLINDLY just because someone said on TV or someone gave you a tip.
You must be an investor come trader. Means you must first invest in stocks for the long term, then ask for collateral margin on the stocks you hold from your broker and then from that money trader options. If you are doing it well everything will make money – the investments, the trades etc. You will be very happy with what your investments are doing.
This is proper portfolio management. Try to make whatever cent you can make from the markets.
Be diversified, hedge, trader with lower brokerages – save and make money BOTH are important.
I manage my portfolio in a very disciplined way. I follow the 25-25-25-25 rule to manage my financial portfolio and every 6 months I re-balance. This is very important to make sure all eggs are not in one basket.
I agree that saying is different that actually implementing, but you have to start somewhere. So if you are reading this article I suggest you open a xl sheet and write down your savings till now, and the see how you can diversify.
You must know basics of everything – financial management, all investments opportunities in India – which is good which is bad – for example investing in ULIPs (Unit-Linked Insurance Plan) is bad, how to choose good mutual funds and stocks and how to invest in them, how to trade options and futures with hedge.
If you follow just the basics of financial management I can assure you that you will NOT see losses in any financial year. The kind of losses you are seeing above were due to FINANCIAL MISMANAGEMENT.
There is no need trying to be next Warren Buffett or Rakesh Jhunjhunwala – just make sure you DO NOT LOSE MONEY TRADING, MAKE AT LEAST 20% PER YEAR IN YOUR TRADING ACCOUNT AND NEVER TAKE A BAD FINANCIAL DECISION OR MAKE A BAD INVESTMENT.
If you can just manage your financials the way I have written above you will live a happy life.
And I hope you live a happy life managing your financials well.
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Dilip Shaw, Founder
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