Buying direct equity is not a requirement for a successful investment strategy. You can leave it to the fund managers by investing in a mutual fund.
If you are starting out on your investment journey, stick to mutual funds and work on getting your asset allocation right.
However, if you have a higher risk appetite and you want to buy direct equity, it isn’t a bad idea. Provided you are willing to do the upfront research. Buying equity just because you see the hype all around is definitely not the way to do it.
Short term trading of direct equity, or stock trading is not an investment strategy. Stock trading is a profession and if you hope to make consistent profits you have to spend considerable time and energy.
Stock trading isn’t making money while you sleep. Typically traders do intra-day trades. Which means the trade begins in the morning when markets open and is done by the time it closes. Nothing happens overnight.
I do buy direct equity with the intention to hold long term. It’s too early to tell if my choices are good or poor.
- I only buy companies that I am interested to follow.
- I focus on industries that I understand and is interested in.
- During research, I ask myself: Will I be excited to read their annual report? If the answer is no, then I pass.
- I note down the reasons why I think the company will do well in the future and my reason for purchase. This will help me evaluate the investment in the future and help with my decision to hold or exit.
Remember: only invest in instruments that you understand. If you see hype around a company that you want to jump in, you are basically gambling. You might make a profit, but you just got lucky.
Stock trading isn’t for me and I prefer to invest my time and energy on my projects instead.