What are the things one need to keep in mind before investing in share market?

Investing in shares is definitely an alluring proposal when you have that spare cash, however, it's a risky endeavor that needs some careful thought before you plunge in. While you can earn great rewards most of the times, but when not researched properly it can bring on a huge financial disaster. The risks and the uncertainty attached to shares is what makes one think twice before they get into it. Here are a few things that you should keep in mind before investing in stocks.

  • Research Before You Buy − Runs quick research on the company and its performance in the last few years. You must have all the details of the company whose share you intend to buy. A company whose business is rather easier to understand should be your first choice.

  • Know Why You Are Buying It − Are you investing in a share because someone recommended it or do you have your own reasons? Your decision should not be based on other's suggestions but should be rather based on your own reasons, like a short-term or a long-term goal.

  • Be Aware of the Risks − You must be mentally prepared before you invest in the share markets because this avenue comes with a lot of uncertainty and risk no matter the economy is doing good or bad.

  • Know the Competitors − While researching the company you are investing in, dig out its growth potential and the sector, you must also focus on the info about its competitors and what advantage does the company has over its competitors.

  • Look for Good Management  − The company's management should be clear about its plans on how to deliver the desired results. If they know how to deliver expectations, that should be good enough for you to choose the shares of that company.