In today’s digital age, fake news is a big problem; believe it or not, random stock market tips are one of the most widespread forms of phoney information floating around.
Many investors, especially the new ones, consider random stock market tips an ideal way to invest. As a result, they often suffer losses and quit the stock market entirely as they invested in stocks based on random stock market tips. They blame the stock market for their failures and never invest in stock markets again.
Is A Portfolio-Based Approach for Long-Term Investment Better?
Let us understand it with an example
When a child starts his educational journey, he first begins with kindergarten, then primary, secondary, junior college, graduation and post-graduation. No matter what, a child cannot simply study for graduation or post-graduation before completing his or her primary education. The child’s early education is a step-by-step approach, which helps the child build a solid foundation before proceeding with higher studies.
Similarly, rather than investing based on random stock market tips, an investor should focus on the basics of stock market investing and proven methods of wealth creation.
Don’t you have a friend or a relative who is a self-declared stock market expert whose advice often influences your stock market investments? Social media, too, is flooded with chat groups promising you the extra edge in the form of stock market tips for huge gains.
If that’s not enough, you have ads that talk of ABC becoming a millionaire in a few months. You click on such ads and are directed to a random page that tells the story of the miraculous wealth creation. However, stock tips are almost always incomplete and incorrect.
In some cases, such tips are sent with the malicious intent of artificially manipulating stock prices so a few investors or traders can make a quick profit out of the misery of other naive investors. As a stock market investor, at some point the other, you may have received messages like “Buy XYZ company for Rs.xxx today. Huge upmove expected in next few weeks as the company has bagged orders worth Rs.xxx crores.”
“Technical Pick of the Month: Buy DEF LTD AT CMP. Short Term TGT XXX in 30 Days”
Such stock market tips are usually sent in bulk by operators who work as a cartel. They first buy vast quantities of low-priced stocks and trade among themselves to artificially raise the prices. At the same time, they spread rumors in the market about how the stock is poised to move up due to some other company buying stake or turnaround of the company. Many new investors fooled by stock market tips fall prey to such fraudulent practices, and then the operators dump the stocks in large quantities leading to a free fall.
Such schemes are rampant, and avoiding such mistakes is the only way investors can make money from their stock investments. So, what should investors do?
Why Long Term Investments Always Have An Edge over Short Term Investments?
Ignore Random Stock Market Tips And Go For Portfolio Based Long Term Approach
If you want to make money from stock markets, stop investing based on random stock market tips. Instead, you should opt for a portfolio-based approach for long-term investment as it reduces the risks associated with equity investments and allows the investor to benefit from the upside potential.
Stock markets are generally stable in the long term, and by remaining invested for a long time in good quality stocks, you are giving the businesses to realise their true potential, which is ultimately reflected in the high share prices. It is a proven fact that a well-diversified portfolio with a long-term investment horizon is the best way to create wealth from stock markets.
Want to create a well-diversified portfolio? Subscribe to the 5 in 5 Wealth Creation Strategy today.
Read More: How Long term investing helps create life-changing wealth – TOI
