The basic objective of stock market investment is to create wealth. But forget wealth creation, very few investors are even able to double their money from stock market investment.
Irrational and emotional investment decisions are the two main reasons why most people make losses on their stock market investment. To double your money from stock market investment one should do proper due diligence and maintain a long term perspective.
Here is a proven three step strategy which can help you double your money on stock market investment.
Diversify your investment
The first thing is that don’t invest all your money in a single stock. By dividing your investment across different stocks from different sectors, you can diversify your risk. If one stock or sector does not perform, performing stocks in your portfolio can make up for those losses.
Invest in tranches
The second thing to remember is don’t invest all the money at one go especially if you are planning to invest a big amount. By spreading your stock market investment across several months you can average out the volatility of the share market.
Look for businesses with huge growth potential - Look for business opportunities which have huge growth potential over time. For example right now the electronic vehicle (EV) segment in India is in a nascent stage. With limited fossil fuel reserves on earth, in the coming decades, electronic vehicles are expected to completely take over combustion engines. So this represents a wonderful opportunity with huge growth potential for businesses involved in manufacturing electronic vehicles and components like battery packs.
Patience Is The Key To Success
In stock market investment, patience is a critical element to double your money. When you invest in quality businesses, you should remain patient to allow the power of compounding to multiply your stock market investment.
“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas”… Paul Samuelson
To summarize the above pointers can help you to double your money from stock market investment. Once you have chosen the right businesses to invest do not get panic due to stock market volatility or corrections. It is also equally important to ignore rumors and hearsays.
Wealth creation from stock market investment is all about risk management, not timing the market. Therefore, it isn’t about selling all your stocks and sitting on cash during a correction phase due to fear of further fall. Many investors do that but then they are also the ones who miss out on the gains that come when the tide turns and market recovers.
This is the right for investment in Stock Market
When there are huge discount in store then what would you do? Most of them would buy it more. Same condition applies for stock market investment too. That’s why it is the most appropriate time to buy the stock in the share market for long term investment.