Welcome to our insightful column into the world of financial wisdom! In a time where the specter of financial frauds looms large in Kashmir, this column is curated to be your beacon of light, guiding you through the intricacies of money management and investment decisions. Financial literacy is crucial for making informed and effective decisions about managing money, investments, and overall financial well-being. Our aim is to empower individuals to make sound choices and build a secure financial future.
Strategic Stocks
Irshad Mushtaq
The share market is often considered a place where people lose money, especially in certain regions like Kashmir. The reasons behind these losses can be attributed to various factors, including aggressive trading, illegal practices by brokers and lack of understanding about long-term investment strategies.
One of the main reasons for people losing money in the share market is aggressive trading. This involves trading with amounts that far exceed the actual value of the stocks in question. For example, if a person has one lakh rupees and does trades worth 10 times that amount, they are at a high risk of losing everything if the market takes a downturn. The volatility of the stock market can lead to significant losses when aggressive trading is involved.
Additionally, trading in futures and options can also be very risky, especially when it involves taking money from the public and engaging in speculative and high-risk practices. In the past, many brokers in Kashmir have engaged in these illegal activities, trading in clients’ accounts and making false promises of guaranteed profits. When the market turns negative, these practices can lead to substantial losses for unsuspecting investors.
Furthermore, the lack of understanding about long-term investment can also contribute to losses in the share market. Many people engage in intraday trading, where they buy and sell shares on a daily basis, hoping to make quick profits. However, this practice is extremely risky and can result in significant financial losses. It is important for investors to realize that true investment means buying shares for a long period and allowing the value to increase over time.
It is crucial for people to differentiate between trading and investment. Trading involves speculative and short-term practices, while investment involves holding onto shares for the long term and allowing them to appreciate in value over time. By understanding this difference and exercising patience, people can avoid losing money in the share market and instead reap the benefits of long-term investment.
In conclusion, while the share market is not inherently a place for losing money, there are certain practices and factors that can lead to significant financial losses for individuals. By avoiding aggressive trading, illegal practices by brokers, and focusing on long-term investment strategies, people can mitigate the risk of losing money in the share market. It is essential for investors to educate themselves about the intricacies of the stock market and make informed decisions to safeguard their financial interests.
- Author is NISM qualified, Mutual Fund advisor and distributor having experience of 18 years in financial market.