Investment in equity or stock markets is one of the best methods of making money. This is because of the fact that many of the companies, especially the blue chip ones are those that will be on a high growth path. The rate of return that a person gets from these companies will be higher than the rate of return that is got from the various fixed investment plans.
Though a person needs to maintain an investment portfolio, the investment should be higher in the equity plans because of the advantages of earning a higher income. In fact the exposure to the equity market should be inversely proportional to the age of the person who is investing. If the investor is young, then a lot of exposure to equity markets is needed. On the other hand, if the investor becomes older, the exposure to the equity markets should slowly reduce.
The best method of investing in the equity market is to buy at the lowest cost possible and selling the same shares at a higher price. This will give a handsome profit to the investor. Though this is easily said, it is quite difficult to exactly sell at the top and buy at the bottom.
There are certain factors that will cause a person to not be able to buy at the lowest price possible and sell at the highest rate possible. The fear that is involved, when trying to find the lowest price of equity, prevents a person from buying at the lowest point. The fear is that the equity prices will keep going down in a selloff in the market. Similarly, when the prices are rapidly rising, the person may want to hold on to the stock because of the profits. The fear and the greed prevent investors from buying low and selling high in the equity market.