Chapter 11 - Investing In Stocks : Introduction

INVESTING IN SHARES

In last two modules, so far we have discussed mostly about stocks and specific strategies for analysing the stocks etc. In this chapter, we will touch upon the basic procedure for starting trading or investment. And then move on to investment styles and strategies.

The best investment choices are those we are comfortable with and that meet our goals. So as an investor we need to follow certain steps as under.

First understand our investment objectives, resources and constraints.

We need to plan an appropriate investment strategy according to available resources, investment goals and constraints. It is also very important to understand the time horizon and our level of risk tolerance as it is directly related to expected returns from investments.

Formulating an investment strategy

Based on our individual objectives and constraints, we need to formulate an investment strategy that suits our goals.

Implementing our investment strategy

From time to time, our portfolio asset allocation strategies need to be altered as per the market conditions. However it is very important to stick to our investment objectives and constraints.

Monitoring our portfolio

Ongoing monitoring of our investments is very crucial. It is important to understand how our portfolio is performing with our expectations and in comparison with benchmarks.