7 reasons why people lose money in sharemarket?

How many times we have heard our relatives or friends saying dialogues about losing money in share market like:no money 2070384 1280 1024x576 - 7 reasons why  people lose money in sharemarket?

“I  am losing money in share market”

“Sharemarket destroyed me”

“I will never invest in Sharemarket again as it ruined me”

“I am losing money here. So you will also. Don’t enter in it.”

In this article I would like to cover all those aspects which tells about how one loses money in sharemarket.

Why do people lose money in Sharemarket?

  1. Psychological

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  •  Basic funda of life is to enjoy life.If it comes into just money making  its whole purpose is lost. Sharemarket is a perfect place where people can be addicted. There are many families which has got ruined by this ideology.So unless you could control the urge that “money is everything” belief  entering in sharemarket could be a disaster. Just think money is needed in life. It can help us to get our necessary things,fulfill our dreams and add colours to our life.This is the important reason for losing money in share market.

2. Believing yourself as an expert

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  • There are 2 phases in share market. Bull phase and a Bear phase. In Bull phase share market will rise. If you have invested 50K in that time your share might fetch you 1 lakh rupees. Then you will invest  1 lakh rupees and may get 1.5 lakh rupees. Naturally you will think you  became expert in this business. Then we will sell all the jewellery,property and invest everything. Then unfortunately bear market came where share market crashed badly. You will lose all belongings. This is under this situation many people even do suicide. We all must understand that we are all novice in this business. Never forget this ever in life.

      3.Following tips blindly

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  • Once you get a trading account you will receive frequently SMS and phone calls  saying that you buy this stock and it will fetch you 200% returns. So if you get a message or call like this ask them back that why don’t you invest in it yourself? Meaning if they are so sure they should try themselves right? There was an interesting scam about this free tips. Imagine you  get a message saying that you get this share and you can double the money. You want to try it. So you got 100 shares for 10000 rupees. Within one month it became 20000 rupees. You are excited. Those people again send you a message saying that buy another share and you can again double the money. You followed their advice. Again your money got doubled after  1 month. You cannot control your happiness.  So you made 40k. Again those people called you. Following their tip you got that share. Your 40 K became 80 K. Next time you will get a message saying that” 3 PREDICTION ALL 3 IN TARGET.BE OUR PAID MEMBER FOR JUST 60K ONE YEAR FOR GETTING SIMILAR TIPS AND EARN MONEY REGULARLY WITHOUT LOSS”.You became so addicted and excited to earn money easily you got the paid subscription.   But after that you are noticing that all their prediction getting wrong.How is it possible? This is how the trick works. They will get a list of 1000 people for example. They will divide them into two groups of 500 each. Then they will message those groups separately.  They initial 500 people to buy that share and next 500 people to sell that share. Either one will be true. Then they will chose only those people whom they got correct. They divide them into two groups of 250 each.First group they will suggest to buy and next group to sell. Then they repeat the process with correct group. Finally they will have 125 people who got everything correct.They will send that paid subscription offer to them only. So in that 125 people even if 20 people get their subscription they can earn 12lakh rupees and those people who follow their tips became  idiots. And whenever your relatives or friends saying that he has earned 1 lakh in share market it could also mean they have lost 2 lakh before. We humans donot want to discuss our failures. We always want to boast about our success.So if you get any tip understand the business of the company and research about it fully. In the age of internet all the details are available in your fingertips.

4. Thinking share market as fast and easy way to earn moneymoney 2696229 1920 1024x590 - 7 reasons why  people lose money in sharemarket?

  •  Everyone wants to earn money. If they invest today they need to double or triple money within 2-3 months. It is not so easy. Remember we are investing in a business. It will take some time to grow. All the great people like Warren Buffet or our own Rakesh Jhunjhunwala took decades to grow money in sharemarket. Remember that.

      5.Under diversification 

  • Do not put all your eggs in same basket.All of them could break. If you put all your money to one stock   or one theme you may get high profit. Likewise your risk is also very high.

      6.Not having a proper exit strategy maze 1804499 1920 1024x546 - 7 reasons why  people lose money in sharemarket?

  • For example you bought 10 shares  share for 100 rupees. It became 20 rupees/share. You became greedy. You hold it again. It became 40/share. You hold it again. Suddenly due to some issues in company share price dropped to 30 rupees. You hold it thinking that it will go back to 40. It again dropped to 10. Then to 5. To avoid this issues you should have a preplanned exit strategy either I will hold it for 5 years .Or else you can plan something like when it became 20 rupees per share sell 5 shares so that you can get your investment back. The remaining is just profit. You can hold it for a longer time. Other strategy is when it dropped back to 35 rupees you can sell it. Problem is it man rebound back to 100 rupees per share. But your primary concern in share market is to never lose you investment.

      7.Checking share Price dailyeye 814954 1920 1024x683 - 7 reasons why  people lose money in sharemarket?

  • If you are a invester daily fluctuation in sharemarket doesnot concern you. Until you sell your share the profit or loss is not real.If you have analysed properly and invested properly forget about the shares and have a nice cup of tea and enjoy life. Review its performance once in a month. It is usual to have 10-30 percent of variation.But what many people do is they will not research properly. They will daily check and When share price goes below they exit in loss and search for some other means of investment.We learn and then evolve. Its not an easy process.losing money in share market losing money in share market losing money in share market

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