scorecardresearch

Simple investment strategies to make money in the stock market

The tricky thing about stocks is that they often grow in value over time, but their daily movement is almost impossible to predict and can lead to losses.

Sensex, Nifty, bank nifty, stock market, mutual fund, mutual fund investment, mutual fund calculator, top 10 mutual fund, top 10 mutual fund to invest in 2022
Growth investors look for those companies to invest in that have good growth potential in the future.

‘How can I make money in the stock market?’ This is one of the most asked questions, especially by young adults interested in making money by trading and investing in the stock market.

Vivek Bajaj, Cofounder of StockEdge and Elearnmarkers, says, “One of the tricks of making money from the stock market is compounding. Yes! The tricky thing about stocks is that they often grow in value over time, but their daily movement is almost impossible to predict and can lead to losses.”

Here are some stock market strategies which you should opt for;

Value Investing

‘“Price is what you pay. Value is what you get.’- is a famous saying by Warren Buffet, Father of Value Investing. Hence, value investors are those types of investors who seek stocks that they believe are undervalued,” says Bajaj. 

He further explains, “Such investors look for those kinds of stocks with prices that don’t fully reflect the intrinsic value of the stock.” 

Having said that, for those investors who don’t have time to research, the price-earnings ratio (P/E) is the main tool for identifying cheap stocks. 

Price-earning ratios are used by analysts and investors to determine the relative value of a company’s shares in comparison. For instance, while a high P/E ratio tells indicates that a stock price is high as compared to company earnings and might be overvalued, a low P/E ratio on the other hand indicates that the share price is low as compared to the company’s earnings and therefore undervalued. 

Growth Investing

These are the type of investors who are continuously looking for the next big stock in the market. They look for stocks that offer strong upside potential.

Bajaj explains, “Growth investors mainly look at the sector’s prospects in which the stock thrives.” In simple terms, growth investors look for those companies to invest in that have good growth potential in the future.”

Momentum Investing

Momentum investors are the ones who follow the notion “Trend is their friend”. Industry experts say these kinds of investors are mainly technical analysts who ride with the trend. 

They enter the stock when the new uptrend or downtrend begins and hold the stock until the trend reverses in the opposite direction.

Bottomline 

When trading in the stock market, Bajaj points out, “one should have patience and diversify their investment in different financial assets like index funds that grow exponentially over the long term, instead of running after the latest multipage stock.” 

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.