As equity investments are capital investments, casual investors face the risk of losing the amount of capital invested.
So, it is vital to conduct due diligence on both the product and the credibility of the source,” said Viraj Nanda, CEO, Globalise.
From a risk perspective, it is important for the investor to evaluate one’s financial position, discretionary income, long-term and short-term financial goals and the probability of permanent loss of capital before taking positions in risky assets.
To minimise the risk, one shouldn’t invest all the money in a single stock, but should build a diversified portfolio by investing in the stocks of different financially-strong companies involved in unrelated businesses.
When investments are diversified, volatility in any section of the market is unlikely to have a major impact on the total portfolios.
While it is essential to follow the daily goings-on in the market, it is more important to understand the historic perspective and invest for the long term,” he added.
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