It is often observed that financially dependent youth easily fall prey to social insecurity and low self-esteem. Whenever they fail to meet any financial exigency they blame luck or follow an illegitimate path of earning money. On the other hand, students self-sufficient in bearing their expenses have a better confidence level and they successfully achieve their academic as well as personal goals. Trading and investment in the stock market is a viable earning option for students who can’t pursue a part-time job and want to devote every hour to studies. Alok Kumar, Founder and CEO, StockDaddy, shares his knowledge on how through investment and trading in stock markets, students can enjoy financial freedom and curtail the burden on parents:-

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Knowledge means earning

Alok Kumar says, "In 2020, more than 70 lakh Indians have opened Demat accounts, and most of them were young people. But, rush jumps without basic knowledge will lead to untoward results. In order to safeguard investments, it is important to set goals and should not step ahead without gaining proper knowledge on how stock markets work. The stock market can only be profitable if you are well-informed about the market practices and the companies in which you are planning to invest. Before making an investment-related decision, thorough research on all the possible options is a must to do exercise. A complete understanding of the industry where you are going to invest will help you avert potential risks and it will benefit you in the long term. Another thumb rule is -- never invest in a stock, invest in a business instead you understand."

Stay safe against scams and Ponzi schemes

Kumar adds, "No investment can deliver high returns with low risk. Guaranteed high returns are almost impossible. Beware of companies that lure investors through false claims. None can guarantee 1% returns per day or 200 percent growth in a month. Such baseless claims and Ponzi schemes are nothing but scams to lure gullible investors. However, people with adequate knowledge and skills seldom fall prey to scams and Ponzi schemes. To stay safe against these fraudsters, proper research should always be undertaken before investing in stocks and invest only in the Blue-Chip stocks or listed companies, present in the stock market for a long time. Also, one should never invest in one single company or sector; the portfolio should be diversified with conservative as well as innovative stocks."

Play wisely with useful investment strategies

"To minimize risks, one should invest more in large-cap (50% of funds) and the remaining in mid-cap (30%) and small-cap (20%) companies. Besides, the investor should have some buffer money ready to accumulate more equities in scenarios of corrections (crashes) of more than 25 %. Also, experts give preference to regular and consistent investment over the size of the investment. It is the patience and consistent investment behaviour that leads to wealth creation, slowly but gradually. That’s why the earlier one invests, the higher returns one reaps in the long run, but guaranteed high returns are almost impossible," he further advised.

Improve your money management skills

"In addition to the precautions discussed above, the key to success in stock markets -- Managing money skillfully and taking informed decisions. In the real world, traders don’t lose money because of their low accuracy ratios, most of the traders and investors lose money because they fail to understand the importance of proper money management skills. Hence, you must know about your can risk-taking abilities (risk per trade/investment) and what should be your ideal portfolio in respect of different market capitalizations. Finally, for short term correction opportunities, you must have some buffer money," he opined.

Be addicted to learning

"Remember, every successful trader or investor happens to be a lifelong learner as they add new skills and learn from their mistakes by keeping a journal of their decisions and experiences. So, if you want to be a smart investor, do not ever leave an opportunity that may enhance your knowledge and skills about the stock market. Various macroeconomic factors bring instant changes in the market and to keep yourself ahead of time, you should be a quick and receptive learner," he concluded.