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How do I get rich by investing in the stock market?

Hi, here is my advice if you are really keen to learn about investing.
Read this before you start investing and it will save you from making a lot of mistakes.
Let me first give you a general overview on investing so you can decide which type suits you better. There are 2 kinds of investing, active investing and passive investing. You can take a passive or an active approach to invest in stocks.
1. Passive investing refers to investing into a financial investment that requires very little management on your part. A major advantage of passive investing is it takes very minimum time and effort for you to get started. However the possible returns from passive investing is a lot lesser compared to active investing.
2. For Active investing, this refers to you doing your own research to pick companies that will be able to generate returns for you, either in the form of their stock price increasing or through dividend payments. The possible returnsfrom active investing is much higher compared to passive, but a lot more work and effort is needed and the returns can be quite inconsistent.
Passive investing is commonly referred to as the lazy form of investing. Because once you set up the investment, it takes very little effort to keep it going.
It is perfect for investors who are:
  • Not keen to learn the complexity of how investing works
  • Not comfortable with the high risks involved for active investing
  • Okay with getting a smaller return on their money
A popular form of passive investment is Exchange-Traded Funds or ETFs. Some of the most popular ETFs are those that track the stock index.
An index is just a set of stocks that are grouped based on certain criteria. Some famous indexes are the Dow Jones and the S&P 500. As these indexes consist of great quality companies whose stock prices keep going up over time, the ETF that tracks them also increases in value at the same time.
Passive investors like ETFs because:
  • They offer good diversification (You will hold a number of stocks from different sectors)
  • Gives consistent returns for the long term (When you hold them for more than 15 years)
  • Don't require much work once you learnt how an ETF works
  • Don't require a minimum investment amount so it is perfect if you have a small capital to start with.
If you are keen in passive investing, some keywords you can Google for are: (ETFs, Stock Index, Mutual Funds and Unit Trusts)
(Here’s my summary on Active investing)
Active investing refers to you doing your own research to identify stocks that have potential to increase in value. The idea is to look for stocks that have potential for growth, are undervalued or pay a high/growing dividend.
Active investing is great for investors who:
  • Are aiming for high returns and are comfortable with the high risks involved
  • Are disciplined and willing to work hard to learn about the different methods
  • Are emotionally mature so they will not make hasty decisions
There are 2 kinds of active investing; they are Technical Analysis or Fundamental Analysis.
  • Technical Analysis focuses on reading stock charts and patterns to figure out if the stock is going to move higher or lower.
The aim of Technical Analysis is to buy stocks that are trending higher or might be starting a strong uptrend soon. You want to take advantage of the changes in trend and momentum. For TA the time frame of investing can be either short or long term.
(TA keywords: trending stocks, types of charts, moving averages, technical indicators, chart patterns)
  • Fundamental Analysis focuses on the company's fundamentals. You will read annual reports, study financial reports and analyse how their business. You will calculate the value of a company (Commonly known as intrinsic value) and compare it to the actual price in the market.
The aim of Fundamental Analysis is to buy companies that are cheaper than their intrinsic value or companies that have a potential for great growth in the future. (An example would be Amazon) The timeframe for FA is mostly for the long term (months to years)
(FA keywords: value investing, growth investing, PE ratio, EPS, PEG ratio)
Overall, most investors lean on one of the above methods. There is no right or wrong answer. You can use a little from TA & FA and combine them together, but one method tends to form the majority of your strategy.
To Learn More About Investing And Get TIPS On Stock Market and How to Invest in Stock Market
Visit : www.wealthmaxsolution.com or Call us At- +91 9285292851

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