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Summary
- Stock market investment is risky, and one needs to have sound understanding of the market before taking the plunge.
- There are tips like maintaining a diversified portfolio and investing in trending sectors which can add a layer of safety to the investment.
- The market provides plenty of opportunities; one needs the understanding to find these.
Stock market investment is risky, and no one can take the intrinsic volatility factor from it. The online platforms are flooded with tips for a safer investment with more return, but no one can guarantee any of these tips as a magic pill for success.
With sound fundamental understanding one can avoid major losses by playing a little smartly in the market. Especially in 2020, the stock market was hit by the wrath of the crazy coronavirus. The crisis that unfolded at the beginning of the year has engulfed the entire year into colossal uncertainty. In this context, let us discuss what could be some smart ways to invest your money in the market.
- Thorough Research: Read and understand about the recent market trends in detail. The market fluctuates due to multiple macro and micro factors and understanding of the direction would help one to choose the best stocks out of the available options. One must keep an open mind to the emerging trends, especially now when ways of living and working are transforming, and multiple new trends are visible in the market, shaping how the stocks are performing. The disruptive Covid-19 phase is bringing many changes for the future.
Image source: Shutterstock
- Diversification of portfolio: It is one of the best tips to minimise risk, and it is still relevant even during a trending market. It is always recommended to diversify the portfolio across sectors to minimise the loses and avoid the possibility of sector specific macro events impacting the overall portfolio returns. In a diversified portfolio, when one sector faces headwinds, the gains in other sectors offset the total loss, so it is indeed a smart way and a best practice.
Also read: Importance of Diversified Portfolio, Glance at ASX-Listed Pilbara Minerals, PainChek, Z1P, WTC, QAN
- Go for dividend stocks: These companies are mostly well-established companies with a track record of giving regular dividends to shareholders, with sound balance sheet. They are less risky, and one also gets some income in terms of dividends. At a time when stock market investments are even riskier, investing in dividend stocks adds some sense of safety.
Read here: 10 ASX-listed dividend stocks under the spotlight
- Be open to new ideas: Investors should be having an open mind to learn new ideas so that they can capitalize on the opportunities stemming from new areas or from different sectors.
The technology sector on the rise: The pandemic year also witnessed the technology boom with increased usage through digital payments, more edtech enrolments, work from home to name a few. Consequently, the technology sector is growing at high speed.
Do Check: What are 5 Technology Stocks to Watch Out Amid Santa Rally?
Image source: Shutterstock
Investing in gold commodity: This year the gold glittered brighter with the price touching record highs benefiting the projects and businesses related to gold mining. The commodity has once again proved it's safe-haven status and continues to grow. Must
read: Troy Resources Limited (ASX:TRY) targets high-grade gold mineralisation at Karouni
Bitcoin comes to mainstream: The most popular digital currency is thriving during the pandemic-stricken year, and the bull rally continues with big names like Paypal entering the space. Amid the ongoing uncertainties, Bitcoin is witnessing a lot of attention from the investors and institutions.
Hope these tips will help you beat the pandemic blues and make you more optimistic towards investment during Christmas 2020 as in any market circumstances there always are opportunities which one needs to find out. With this, the Kalkine family wishes you a Merry Christmas.
