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What is your long-term investment strategy in the stock market?

Stock market investments are almost synonymous with risk-taking for many. People always imagine day-trading to be the only way of making money in the stock market.

And while it’s exciting, it’s not for everyone! But if you know what you are doing and intend to follow a well-thought-out strategy for long-term investment in the stock market, then you stand to gain a lot.

Although everyone has their own goals and expectations, a few simple guidelines can help you define your very own strategy for long-term stock investments.

1. Identify how much to invest

You may need some of your investment capital to be liquid and readily accessible in the short term. Park your money in the stock market after determining what your short, mid, and long-term financial needs are.

2. Research before committing

Whether you are a beginner or a seasoned investor, researching a stock before investing in it is a must. Check the company’s fundamentals, historic returns, P/E ratio, and future projections before investing in it.

3. Choose quality over quantity

Blue-chip stocks and value stocks (which are expected to blow up in value) are quality options for long-term investing. Be wary of cheap penny stocks or of stocks that you know nothing about.

4. Diversify

Even within high-quality stocks, try to diversify your investment between large-cap, mid-cap, and small-cap companies. While large-cap stocks can offer more secured returns, mid and small-cap stocks can offer higher returns. Not to mention, your exposure and risk will be much less.

5. Hold the winners

Regularly review your stocks and be prepared to divest from consistent losers. But when you find some true winners, don’t sell them off. Hold them for as long as possible to book maximum total gain.

In conclusion

Warren Buffet’s famous words, ‘We don’t have to be smarter than the rest, we have to be more disciplined than the rest.’

Should guide your whole approach towards long-term investment in the stock market. Remember to set clear goals, choose stocks after thorough research, invest within your means, and then sit tight for value to be created.

Discipline is needed not just in following this process but staying the long haul with the good investments that you made. FlipItNews app where you can get real-time, customized Indian stock market and business news delivered to your phone.

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