In this post, we are giving golden rules of investing in stock market for beginners. We have analyzed stock market investment from different sources such as books, blogs, websites, and social media and we have done it practically.
We are giving the most valuable five rules of investing in a concise form
1) Invest in a company whose business is not dependent on the people managing the company. Some products and services are so good that their businesses can run smoothly even if their management is changed. It does not mean that you ignore the management altogether.
2) Invest in a company whose percieved market value is less than the intrinsic real worth of the company. By doing this you make sure that you have invested your money safely. It gives you a margin of safety.
3) Instead of finding the best companies to invest, you can go for good or better companies which have potential to become the best. Good and better companies have better growth rates than the best companies which grow slowly. You should always consider the potential of growth of a company while investing.
4) You can invest in a company whose fundamentals are strong and its business is doing well, but its stock price has fallen for some temporary reasons and it is likely to increase again.
5) Invest in companies which have a strong economic moat. A company having a strong economic moat means it has a strong competitive advantage over its competitors for a long period of time.