Financial Security is the concern for everyone, not only to fulfil the needs and desires in present, but also to plan the retirement. Investment is one of the best solutions to make yourself financially secure and add that extra income. But investing your hard earned money is not that easy and requires a proper planning before you actually start investing.

Investing money in the stocks requires some proper research and plan in order to gain better returns. Planning along with the inconsistent stock market, is the factor responsible to turn your hard earned money into positive returns or the reason behind losing your money in the stocks. Thus, a well planned investment chart always highlights the following factors which help in stabilising the profits and the losses.

• Diversify Investments :

Diversification is very important. When it comes to investing in stocks, it is important to understand that not all the stocks perform well neither do they provide consistent returns over time. Keeping money invested in one particular stock is not only risk over a period of time but it also affects the returns in the short run as well. Thus it is important to diversify your portfolio to maximise your returns.

There may be stocks in various sectors performing well compared to the stocks in some other sectors. There are some shares like IRA which also provide tax – saving benefits along with good returns. Thus it is necessary to study how the various stocks behave and the returns they provide in specified time period.

Also due consideration shall be given to the company holding these stocks, there may be stocks of one company outperforming than others in the same sector.

Diversification implies studying all these factors and selecting those stocks which will provide stable returns over a period of time.

• Plan long term investments:

Investment in stocks for short term is of no use. Stocks are generally the portions of the company which you can buy and later on sell as per your wish. The returns in stocks are generally calculated as earnings per share based on the profit accumulated by the company. Profit generation is not a task which occurs overnight and can be achieved only over a period of time.

Long term investment is also necessary due to the unstable nature of the stock market. The value of stock cannot be predicted over a short term, it requires a long term to analyses its performance.

• Resist stock speculations:

Resisting stock speculation is equally important as stock diversification. People normally tend to buy stocks getting speculated by the present returns or the current status of the company without analysis the facts. It is always necessary to analyse the company’s past and the present performance and consider the future missions before deciding on to the stocks you desire to buy.

It is also necessary to study the stocks sector wise and select those which will show its consistent performance even during the downturn of the stock market. e.g. food and beverages sector, blue-chip sector, etc.

Smart investment is the secret behind the profits earned from stocks and to invest smartly all you need to do is diversify investment across various market sectors and asset classes, keep invested in stocks for longer duration and carefully select the stocks.