More than often, people willing to invest in stocks will wonder what the right time to invest in them is and how to invest in the stock market?
Given how volatile the stock market can be, when investing in stocks is there even a right time to invest in stocks and what are the best stocks to invest in India?
There’s likely no definite answer to this question because of how many variables there are to consider, but this post will tackle some of those variables to at least give you a clearer picture.
Investing in stocks: Who is it for?
Investing your money is a time-tested way of generating income from your money, allowing you to save for a later date. Investing as early as possible is one of the ways to ensure that your returns pile up over time, but choosing the right investment platform can be a tricky thing to do, especially when there’s no guarantee that the returns will be big.
Choosing what to invest in is usually dependent on your goals. With that in mind, investing in stocks is usually best for those who are ready to take the risks that come with it.
Stocks are relatively riskier compared to fixed income investment options, but they often tend to give bigger returns. Hence, while anyone can invest in stocks, it is often recommended to those who wish for large returns quickly, while also being resilient to risks.
When investing in stocks, if you have doubts, and most likely you will, you should get in touch with a full-service broker who can help you with your investments and ensure your future is safeguarded.
How to Invest in the Stock Market: Are There Any Personal Factors?
There can be external factors that determine the time for investing in stocks is right, but there are also personal factors to consider.
- Do you understand how stocks work?
- Do you know what all is required for you to invest?
- Do you have sufficient funds that you can invest?
- How to invest in the stock market?
- What are the best stocks to invest in India?
These are some of the things to consider when preparing yourself and knowing if you’re ready to invest. Even basic knowledge of how stocks work and the various factors that determine the cost of stocks is crucial knowledge to have and can protect you from making risky investments.
Furthermore, having some financial stability is recommended. Stocks can often be a risky investment and you might end up losing money instead of making more. Risk tolerance is another factor to consider in this case.
When Is the Best Time to Buy (or Sell) Stocks?
Considering the question is if there is a right time to buy stocks, the answer could be a literal one. In this case, considering the time of day can be good practice, although this is applicable more for people who are intraday traders – as in, traders who buy and sell stocks on the same trading day.
The stock market operates between 9:00 AM and 3:30 PM, which is why it is often suggested to consider trading between 9:30 and 10:30 AM. There are a few different reasons for that. Regular inter and intraday traders know how to manipulate stock prices throughout the day by buying and selling but can leave beginner traders flustered and confused. There’s also the volatility and volume in which stocks are traded, which drops after the first 90 minutes. Additionally, the stock market also takes about 15 minutes to respond to the previous day’s events. Hence, waiting out the first 15-30 minutes is advisable.
You might also have heard about Monday being the best day of the week to buy stocks in, although it is not favourable advice. Usually, the price of stocks can be affected by global events, hence they vary drastically across the week and there is no one particular day that’s better than others when it comes to buying stocks.
What About Stock Value?
Supply and demand are usually what determine the value of stocks. An undervalued stock is one whose value is projected to grow in the future. An overvalued stock is one whose value can sink in the future. It can be hard to figure out how much a stock is worth, and you have to guess based on how the company will do in the future.
This is one of the reasons why knowledge of how stocks and the stock market work is necessary. Furthermore, research is important to learn the value of a particular stock before investing in it. There are many factors that go into determining whether a stock is being undervalued or overvalued.
Techniques to determine a stock’s value usually involve techniques like discounted cash flow analysis and comparing a stock’s price-to-earnings multiple with other stocks.
The above text lists some of the factors that can go into determining when to invest in stocks. To summarize, there are multiple factors to consider and there is no one right time for investing in stocks.
Closely analyzing the market and assessing your investor profile is a good practice. If you want to master the stock market, then you have to put in the work and learn the ins and outs. Thankfully, nowadays there are many ways online to learn the details of how the stock market works.