How to make money on stock market starting with 5K

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How can I make money in Stock Market with 5k investment?

As the Bulls are having a dream run on Dalal Street, we are hearing the stories of so many stocks which have multiplied x times or have become multi bagger in short period of time. Everyone is inclined to make fast money and the way the Equities are moving today, it surely leave many individual with “left out” feeling. So there is a “left out” feeling amongst many common people who are not familiar with the investment in stock market. However one has to be vary of this “left out” feeling itself. For a small or retail investor, this feeling might turn out to be “Trap” as we always hear the stories of how retail investor are the last participant in the Bull market and they are the one who are left with the stock when Bears (read correction) enters the market.

As a caution one can always keep this in back of their mind but at the same time if an individual takes well informed decision to invest in the market than he or she can surely make money from investment in stock market. It is important to understand that stock market is not to make fast money. Investments in stock market needs more of a disciplined and focus approach which will help an individual to make money.

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Next critical question is: – How much money should I start investment with?

There is a general perception is that stock markets are only for wealthy individuals or those who have deep pockets. However this is not true. Of course, deep pockets helps but the stock market do not restrict entry of any individual with smaller initial investment.

Well anyone who wants to start participating in stock markets needs to be very clear in the mind that this is a “High Risk” investment class and as an individual how much loss he or she is ready to bear in case the investment idea goes wrong! With this basic clarity, one can decide any amount that he or she is comfortable with. Lets us assume an individual to start investment with Rs. 5,000.

Of course as an individual you are not an expert and have very limited knowledge on the stock market as well as day to day price movements. However do make sure you follow some simple rule before investing in any stock;

How to make money on stock market starting with 5K

  • Do not blindly buy any stock on any “Tip”. Try to get more details of the investment idea before jumping into bandwagon.
  • Always have long term investment horizon, avoid taking short term bets
  • Always remember when you invest in stock, you invest in Company. Over long term the price of stock will move up provided the business of the Company does well. So basic knowledge on the fundamental of the Company will help investor identify key risk involved in investment in the Company.
  • Keep extremely strict and objective return/ profit expectation. In case of profit do not let your greed overtake your profit and investment objective. Book your profit if the investment is giving you desired return/ profit.
  • Keep a very strict Stop loss levels in case the trading or an investment idea goes wrong. Stop loss is the best way to minimise your loss. There are no sacrosanct numbers for stop loss levels. It purely depends on the individual’s risk appetite and capability to absorb loss, if any.
  • Avoid taking trades on Futures and Options (F&O) segment as this is high risk trading.
  • In short term, day to day price movement can be very volatile depending on the market movement. Again stick to your objective, Risk/ Return profile.
  • Do not try to time market. Higher market level does not mean that there will be steep correction and a lower level of market is no way a good indicator of bottom. So again stick to your objective of investment and keep long term horizon.
  • Commit your investment with discipline. Avoid active churning or so as tp say, frequent Buying & selling of stock.
  • Focus need to be always on investment with long term horizon as that will help individual to create wealth over period of time. Avoid “Speculation”.
  • Start reading and listening to market commentary in your idle time
  • Learn from your mistakes or any trade that had gone wrong.
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Those who are sitting on the fence may feel that the money making is easy in the stock market but actually it requires lot of dedication, discipline and patience. It is immaterial if you are starting investment in stock market with Rs. 5,000 or Rs. 5 Crs. But at the same time, once you commit your capital in stock market, do not look for short cuts. One need to give enough time to accumulate and grow that capital over period of time.

 

Author’s Bio

www.elearnmarkets.com is a young vibrant company established with the vision of taking online financial education to a new level, both in India and abroad. Guided by our mission of spreading financial literacy, we are constantly experimenting with new education methodologies and technologies to make financial education convenient, effective, and accessible to all. We provide courses on basic finance, Fundamental Equity research, Technical analysis, Economics, Derivatives, Currencies and Commodities and many of our courses are conducted by reputed market experts and certified by leading exchanges like NSE, MCX and NCDEX.

2 Comments

  1. Vickie May 12, 2018
    • Martins May 13, 2018

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