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The stock market challenge: 5 ways to succeed 16 April, 2019   

Saving for your retirement will prove to be more beneficial if you can do it earlier. The money will grow much more when you plan for a long term irrespective of the investment vehicle you choose. When you look at the multiple investment options, the stock market offers the best potential for growing your money, comparatively.

This article will give you a glimpse into the stock market, the various stock market challenges and how you can do well when investing in it.

Stock market challenges and the ways to overcome them

The stock market is unknown territory to many of us, and that is what fears us most. If we charter into unknown territory without prior knowledge or experience, we could very well hurt ourselves and our bank account considerably. It is therefore important to know more about the stock market and the various challenges and understand the mitigation points to make the best out of your money.

When you are investing in the stock market, you need to have not just money for investment, but you also enough patience to wait out the fluctuations in the stock market. Here are a few things that you need to do or not do for a successful venture in the stock market.

1. Don’t get influenced by others’ decisions

More often than not, people are influenced, knowingly or unknowingly by the decision of others. In the stock market, you would often see the herd mentality where people follow the decision of others, either their friends or their relatives or acquaintances.  It could be daunting to face the stock market challenges but never let your decision be influenced by others. 

A stock which proved beneficial to your friend may not hold the same to you due to the time lag in investing. Never go with the herd. You have to make a decision based on the market environment, the rates of the stocks, your buying and risk potential before investing in the stock market.

2. Gradual growth is necessary for sustainability

Patience is a virtue, and it is more than applicable when you are investing in stock markets. More than the timing for investment, it is important that you build your portfolio slowly and steadily. You can follow any of the below options when you buy stocks instead of buying them in one lot. It will help to reduce your exposure to rate fluctuations.

Divide your total investment amount into three portions and buy the stock/shares in three regular intervals rather than buying in one lot. You can either buy them in three months or three quarters. It will help you to see if the stock performs well or not and then decide on the next portion of your investment. If the stock is not performing, you can always change the investment option in the second or third lot.

Invest your money in a set of shares at regular intervals. You can buy the same shares every month by spending only a small portion of the money. It is called dollar cost averaging where you will get more shares when the price goes down and lesser when the price goes up. In the end, it will average out to your benefit.

If you are not sure about the company you should invest in, then you can buy a basket of stocks that will have a stake in all of them. This way you can set off the loss of one company with the profit of another and it is one of the best ways to stay afloat in the long term.

3. Portfolio diversification is the key

If you want to minimize the risk on the stock market challenge, then you need to look at optimizing your investment returns. It is possible only if you have a diversified portfolio. It is your hard earned money, and you should look for ways to keep it safe even if your risk capacity is high. 

It is the natural cycle of stock markets where if one stock goes up, then the other one goes down. Because of this, investment experts advise you not to invest all your money into a single fund. 

You should rather invest in different stocks from different sectors. It will ensure that the upward movement in another mitigates a downward movement in one sector. It will also help in reducing the loss and optimize the protection of your capital.

With a diversified portfolio, you are also diversifying your risk possibilities.

4. Keep watch on your money and your emotions

If you want to succeed in the stock market, you need to make logical and informed decisions. You cannot let your emotions control your decisions and think through every decision before executing them. 

Irrespective of how the stock prices move, there is always a decision to be made. When they are moving up, you want to know if it is time to roll up your profits or if you should play the waiting game. And when it starts crashing, you want to know if you should hold on until the tide passes or recuperate your losses right away. And during those times your emotions will be running high and can drive you to take action or inaction. 

When you make decisions based on your emotions, often it will not work in your favor.  Due to this, you should learn to keep a watch on the market and your emotions whenever you have to make a decision. 

If you want to avoid this haze, then you need to plan during the time of investment. When you invest in any stock, decide ahead on how long you want to hold and what is your expectation from the stock, how much time you should wait for it to perform and decide on your strategy for the exit as well. When the time comes, you need to go ahead with your pre-decided intention.

5. Knowledge first, investment next

It is very important for you to understand the stock market and the challenges it brings along. It is not just enough to understand how the stock market works. You should also understand about the businesses the stocks belong to, the company to whom it belongs to and their past performances so that you can make an informed decision.

You should never venture into investing in companies and stocks that you are not sure of or you don’t understand. You should also never buy stocks because you love the brand image, but rather you should analyze how the stocks have been performing and the trends before making a decision. We are in the stock market to make money for ourselves and not others. You need to remember this every time you make an investment decision.


Irrespective of the age you start saving money, it is important that you keep your capital protected from any possible risks. To overcome the various stock market challenges, you need to equip yourself with the knowledge on the stocks that you want to invest in, the company it belongs to and analyzes the performance of the stocks before venturing into it.

Do not be disappointed when your stocks do not perform at a certain point of time but rather wait it out to enjoy a better benefit in the longer term.

The stock market can be your perfect option if you diversify your portfolio and make informed decisions and invest in the long term. Understand your risks and your potential to take the risk before you start investing. 

The earlier you start to invest, the better your returns will be in the longer term. Of course, you should know when to quit if you want to gain from your investment. Happy investing!


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