I frequently encounter this question from my friends who are new to the world of investing. They see the wave of bull markets.... the markets were at x levels when they just started there career 3 years back and now the market seems to have galloped to x+x levels.... isn't it great?
Well I want to tell, "You do not need to ask me. You need to ask yourselves. After all it is your hard earned money." But since they are my good friends, it is my duty to guide them as well. If I am not able to encourage them in investing then I should not discourage them as well. Also I should not leave them in the limbo which the above answer is going to get them into...! The real friends do not leave you in confusion, they help you get out of the confusion.
For this sake of my friends and many other innocent people like them, I have compiled this list of questions which one needs to ask before putting their hard earned money in stock markets:
- Can I afford to lose all of this money?
- Can I afford to survive without this money?
- Do I need this money for any emergency in future?
- Do I need this money to sponsor the education of dear ones?
- Do I need this money to purchase a house?
- Do I need this money to pay my house/car mortgage?
- Do I need this money to sponsor a marriage?
Don't invest if answer to Q. 1 or 2 is NO and the answers any of other questions is YES...!
The list is not exhaustive.... the only point it serves to make is "don't invest the money which you cannot afford to lose". Stock markets are unpredictable. The markets punish the amateur & uninformed investors most heavily. Go to market as if you are going on a war.... "fully prepared and protected....".
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