Plan For Retail Investors To Make Money

Professional investors of the stocks market normally make a good profit over a long period. The main reason behind this, is that they have all dedicated research analysts, they have the knowledge to pick the right stocks and moreover, they stick to their own plans.

However, this is not true for retail investors. Most small retail investors see the stock market as an option to 'Make some Quick Money'. Being a non-professional investor, they don't have a solid plan, no knowledge of stock picking and moreover totally dependant on market rumors.

This kind of method is nothing but gambling. So, they face the same fate as most of the gamblers does - 'loose your wealth' in no time.

Here are the plan for retail investors to make money in stock market -

Objective - You are not investing to become rich overnight. Remember, one stock price even double or triple in few days will not be enough to make you super rich. Your objective is to be an investor for rest of your life. So, protecting your capital is more important then earning some quick return. Remember, even after this recession also, index has come to 12000 points, starting from 100 in 1980. So, objective is not to stay short and risk your money. But stay as long as possible to ripe the benefit of economic growth of your country.

What to Buy (Selecting Stocks) -Stock selection is the key for successful investment. But this require knowledge and skills. This will be hard for an individual investor to select a stock. Our advice is, depend on some professional to select the right stock for you.

When to Buy - As we have said earlier, leave the responsibility of stock selection and when to buy on a professional you trust. Remember, don't go by market rumors. Stick to one individual or organization for advice. This way, you make him or the organization responsible for their act.

When To Sale - This is probably the most important decision. You have to take this decisions yourself as every individual has different risk taking ability. There are a number of simple technique to determine the action plan after purchasing a stock. Below are some of the simple technique -

  • If you purchased a stock for 100 each, take a piece of paper and right down your probable actions for all types of situations - increase in price, decrease in price and if price remain stable for a long period of time. Going forward, access the price of the stock according your action plan and act accordingly. You don't have control over the price of the stock, but you can control your strategies and actions. Just concentrate on that. 
  • Do not marry with a stock. Never let your emotions influence your actions. 
  • There is no need to evaluate the stock price every day. Until there is an unusual situation, only evaluate the stock when they publish their quarterly result. This is the time when when most of the stock price will change. 
  • Stick to large cap stocks only. Never ever venture in small cap or mid cap stocks. It is better to spend money in lotteries than in these stocks. If you are not an pro of stock market, it is next to impossible to select a winning small cap or mid cap stocks. 
  • Do not get confused by the number of stock tips in a month. Subscribe to those stock advisors who recommend not more than 2 stocks in a month. Otherwise you will get confused to select the stock to invest out of such a huge recommendations. 
  • Set your goal on profit target for the year on your total investment portfolio. Keep it reasonable and work around it. Do not take a profit target which is not self convincing. Try to ascertain the reasons for such profit target you have taken. 
  • And last, but not the least, have self discipline. Once you have finalized your plan of actions on specific stock as well as on your portfolio, you need to follow that consistently. If you are not a self disciplined person, probably you should stay away from investing in stocks. 
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