Stock markets provide high returns compared to other investments. However most investors shy away from stocks as they are not properly informed. Here we try to address some misconceptions regarding stock markets.

Fact: The perception of high risk in stock investing is not totally without merit. Many investors have lost substantial sums of money in the market. This is very unfortunate because stock investing is one of the best avenues the average person has of accumulating substantial wealth. And it really doesn't have to be very risky. It just requires a few simple techniques and some discipline. Check out these rules before you invest in stocks. Buy stocks with consistent, predictable earnings growth, buy stocks with earnings growth rates of at least equal to the sum of current inflation and interest rates and diversify. Do not put more then 10% of your money into any single stock. - Do Not own more then two stocks in the same industry. - Do Not plunge into the market. Spread the investments over time.

Myth: Stock analysis is for analysts. I only buy what's hot.

Fact: Very often investors would rather buy what their friend or broker or neighbour tells them to, than sweat it out doing their own homework. If you must invest in stocks, do it only after you have equipped yourself with sufficient knowledge of the stock. As a rule of thumb, get to know your companies first before investing in them. The first and most obvious step is to understand the numbers. This involves a thorough reading of the company's annual report - which will help provide an initial understanding of the financial position of the firm and the implications thereof. So to reap your investment rewards in the stockmarket, all it takes is some time and effort, and surely that is not too high a price to pay for protecting your hard-earned money.

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