Question

Please discuss how a beginner should invest in the stock market (250 word)

Answer 1

A beginner is exposed to high degree of risk when he is investing into the stock market for first time and he should always be trying to have the proper knowledge before trying to invest into the stock market because there is a high risk of capital erosion and beginners should always be trying to understand the risk analysis and he should be trying to understand the the market and he should be firstly not trying to make the high rate of return but he should rather be trying to understand the behaviour of the market and market participants.

beginners should always be rational in nature and he should never expect the astonishing return from the stock market and taking very high risk because it will expose him to the risk of capital erosion and he should be at the beginning trying to invest into index funds because index funds will be providing him with the passive investment strategy and he should also try to invest into a cluster of mutual fund which will provide him with a high degree of diversification and low risk because investor who is investing into the market for the first time are not known to the risk associated with investment and volatility associated with investment so they should be trying to understand the risk through investment into all these low beta stocks and companies and hai diversification of these funds will also help you to understand a lot

he should always be aware about his risk appetite and their expectations from the market so he should always try to have a rational expectation and he should not invest high amount so he should be trying to be rational and he should always invest in cluster of various mutual funds and they should mostly be passive because it will provide him with a chance of understanding the market rather than making a very high rate of return and he should always focus on portfolio diversification because it will eliminate the risk to a large extent.