Share market is wonderful medium for a constant source of income apart from your regular job. But without proper knowledge, it can be a risky proposition. It is always better to get some insight from someone knowledgeable. This is a simple letter of advice to a friend who is new to share market. The letter can be modified according to need and preference.
To
ABC
C/0 XYZ
Address of ABC
Dear ABC,
Your letter always brings smile to my face. Last Friday, I was also not any different. I was happy to know that you are showing some interest in the Indian stock market. Financial stability is very important for a balanced and prosperous life and keeping in mind the jobs scenario at market, it is always handy to keep a second income source open. Since you have sought my guidance, I will try my best to share my experience with you.
First things first, there are two stock exchanges in India for buying and selling stocks that is NSE BSE. You need to open a trading and Demat account with the broker to start trading shares. It is important to keep in mind that share market is not something where you get lucky and earn big. Yes sometimes it can happen but it is rather an exception than a rule. You need to develop skills to survive and make profit. A key point to remember is that it is better to invest in good fundamentally strong stocks then the fancy ones.
Stocks like Infosys, HUL, Tata steel etc always seem to be expensive. It is true because they regularly bring in profits in their quarterly results and hence these are favorites of the investors. The trick is to accumulate them at lower levels when there is correction in the market. During such time, one has to overcome the fear of investing as they can be bloodbath in the market. Such positions can be created with discipline and patience and one must be brave enough to take the plunge then.
One has to keep a tab on the results of the companies one has invested in. If the result of the companies is good, continue with them but if the results are not satisfactory then sell them. Also, it is important to know about the future prospects of the companies. Whether it is possible to continue with the consistent profit? One has to keep an eye on which sectors are doing well and which are the sectors which are likely to be benefited from new government policies. I would also suggest you to not take any kind of loan for trading or invest your entire amount. You should only invest an amount which should not affect your daily living if there is any kind of substantial loss. So be patient and pick only good quality stocks.
I hope
this is enough for today. If you have any queries, please do let me know and I
shall definitely reply back.
Yours
Truly,
Your Name
Your Address
Date:
Place:
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