Last week we understood why it is necessary to invest for long term. This week we shall understand, what according to legendary Investors like Benjamin Graham and Warren Buffett, are some of the most important things that are required to succeed in Stock market Investing. In case of stock market investing, a person who invests in stocks after gaining proper knowledge and experience of stock market will always create excellent wealth in long term.
Many people wrongly believe that to succeed in stock market investing, one needs to have financial background like B.Com, CA, MBA, etc. But in reality this is just a myth.
I have personally met so many successful CAs, MBAs and CEOs to whom investing is still like Greek. They are highly successful professionals in their own fields, managing empires worth millions and billions of money. But when it comes to investing in stocks, their performance is a lot different. That's why they take professional help and/or choose mutualfunds.
In case of stock market, it is not just about your education that matters, but you need knowledge of the market, in particular. To become a successful investor, you need to learn the nitty-gritty of investing. Obviously, your education would play a significant role in the way you think and look at things, which can help you understand this investing business faster and better.
Normally there is a misconception in the minds of the people that making money in stock market is very easy. But in reality, stock market is a place to make easiest money in the hardest way. The path is very complex and you never get answers to a lot of things.
There is no short cut to it. You need to learn and analyze the principles of investing and implement them according to your own nature. Education will give you the wisdom to analyze things in right perspective, but that does not ensure success. Remember, no academic degree can guarantee you success in stock market. For you need to apply both your education and knowledge of investing and experience.
If you are a beginner then before proceeding to investing in stock market, we would advise you to first learn the basics of stock market investing including fundamental analysis of stocks.
But thankfully, learning all this is not as difficult as it may sound. If one is passionate about it then surely it can be learned easily. There are several books available in market which can be helpful to learn everything.
Warren Buffett has pointed out that you don't need to brilliant to be a great investor, he quotes -
Apart from knowledge, right temperament is equally needed to successfully make money from investing in stock market
Investing is a test of patience and perseverance and person who is capable to handle it can surely make huge money from stock market. If you are interested in investing money in stock market, then remember what Peter Lynch says -
Although stock market is a great place to make a fortune in long run, most of the new comers lose money in it. This is mainly because of their unrealistic expectations of getting rick quickly via investing in stock market.
To be successful in stock market investing, one should always remember that behind every stock is a business and investor must try to find out what the company is doing and how well. For this knowledge of Fundamental Analysis is must.
Next week I shall explain some basic rules which every new comer must follow while investing in stock market