Precautions to undertake while investing

We invest money in the stock market with an intention of making more money out of it. But only a few are able to actually realise this profit out of their investments. This is due to the necessary precautions not being undertaken by the investors. Hence here is a list of a few things that must be kept in mind before/while investing:

1. Make sure that the broker you are dealing with is registered with SEBI, i.e. do not deal with an unregistered broker as your funds will then not be in safe hands, and they may be misused. Do not be mislead by the false claims that the brokers make.

2. Do not get attracted by rumours or news of companies making sudden and huge profits, as these may be tactics to gain an unfair advantage out of the funds of some unaware or less educated investors. Make proper researches before investing in a particular project and get satisfied.

3. Try and make good efforts to gain knowledge about the working of stock markets. If you read newspapers regularly, it won’t be difficult to judge which projects are suitable to be invested in. Some unaware investors, who do not have knowledge of stocks generally lose their money by investing in unfavourable projects.

4. Do not be attracted to stocks based on what an online website promotes, as this may be a way of getting funds quickly and misusing them. Do proper research work and then invest. You may also take advise and guidance from some friends, relatives or anyone who is having a proper knowledge of stock markets and shares.

5. Take informed decisions only after getting to know about the company you are investing in. Find out the business in which the company is, its future prospects, past records, its way of funds utilisation etc. Sources to know about the same are a company’s financial statements, its annual records, data available with the broker and the financial advisor.

So the key to safe investing is being well informed and aware about the stock market, and not being lured by rumours and news.

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