Often you might have heard your friends boasting of making quick bucks in the stock market with little money or no money at all! Whats that secret? How to make money in the stock market with little money to spare or no money at all?

First let me tell you the fact that your friend has deliberately revealed half the truth! How? People conceal their mistakes that they make in the stock market of losing money. Let me further drive home the point that you cant make money consistently by trading daily in the stock market or one fat buck overnight. You will be losing more than what you make by trading often. The odds are more against you if you want to successfully trade and take home money daily. In short, you cannot win the daily bread and butter in the stock market or one fat buck in a single shot! Can you point at least one person who has been successfully trading daily in the stock market for the past 10-20 years and has become rich? No you cant! Now if I just alter the question and ask Can you point anyone who has been successfully investing in the stock market for the past 10-20 years and has become rich? the answer would be Yes, there are many. Thats the bitter truth.

Then how could you make money in the stock market with little money then? The answer is simple! Inch by inch, its a cinch! In order to make money in the stock market, your basic outlook about the stock market should change. You shouldnt think of the stock market as a treasure trove. View stock exchange as a market place where businesses are sold. Assume yourself as a businessman looking out to buy a good business at a cheap rate. Think buying stocks as buying fractions of businesses that have strong fundamentals whenever they are sold cheap with little or whatever spare cash you have. Analyze the financials of the business that you think is attractive. Be it a bull market or bear market, be it a black Monday or a dark Friday, an election year or a non-election year, if you find an attractive business selling at a discount price, never have a second thought. Buy whatever quantity you can and forget it. Forget about the humbugs of technical analysis and historical prices. Never heed to anybody. You should be able to justify yourself the price for which you bought a scrip. Of course, the money used to buy here has not to be borrowed or cash kept aside for some other purpose.

Okay, you have bought a stock at a wonderful price. When do you sell it then and take home the profit? Never be contented with short gains. Aim for big. Think of 500% gain over a timespan of 20 years! Thats 25% simple growth rate of your money! Make sure the business you purchase was there for 20 years and analyze the probabilities of it being there live and flourishing for the next 20 years. Thats it. Never turn back and look at the tickers. Did you look at any ticker once you bought your house? People usually are happy booking small profits rather than having their wealth appreciated by holding it for long! The more long you could hold on to a successful business purchased at a rock bottom price, the more your wealth appreciates.

You have to make investing in the stock market a lifetime habit to be a successful rich man at your sunset years. Keep on investing and reinvesting. Reinvest whatever you get from your investments, whether it is cash dividend or bonus shares. Make investing a never-ending process. Historical data shows that investing in equities, if you do it properly as said above, has fetched the maximum returns than any other asset class. By repeatedly investing little money in tranches over years and compounding the returns, you make money in the stock market. By the time you retire, you will have a large kitty at your disposition. So thats the secret. If you look at the habits of rich, you could easily figure out one thing. They never churn their portfolio often or sell their solid businesses, be it Bill Gates or Warren Buffet or any other one on the Forbes list. No broker will tell you this secret as brokers want regular business to survive and they would only encourage you to trade as often as you can!

In short, making money and getting rich in the stock market is only for passive, long-term investors, say for a horizon of 5, 10, or 20 years, and not for the hyperactive daily traders.

Share this page with your friends