Thinking of investing in stocks? Here's what you should know

Stick to your 'own' timeframe:
An investor has to stick to his own plan and timeframe, says Kumar of Value Research. The broad principle should be that if you pay taxes, choose the tax-saving fund and do your SIP.

"If you have never invested in the market, you will be extremely disappointed if there is a 20% decline. So, prefer the balanced funds. Or you can choose the funds that we recommend," he added.

Some of these funds have a history of generating three times more return than what a fixed return product could have generated.

He further cautions that a lot of investors are entering the market or mutual funds for the wrong reasons. They just look at the last one year's return, and they get attracted. That is a wrong way to start investing.

Stay away from exotic schemes:

"My understanding is that most mutual funds investors should keep away from any such stories," says Kumar of Value Research. The reason why investors should come to mutual fund is very simple: diversification, belief in equity and their own discipline, and the ability to invest Rs 5,000, Rs 2,500 a month in a diversified portfolio.

"In that sense, all the exotic schemes are against that principle. You are basically concentrating, not diversifying, when you are doing that. If you are investing in a Brazil fund or if you are investing in a gold mining fund and that is 3% of your investment and you have some specialist knowledge that could be a different story, but most investors will be well off by keeping away from any such idea," he added.

In Indian mutual funds history, Kumar says that he has seen only one or two situations when exotic funds at that point looked interesting. For example, the launch of a liquid fund was very interesting.

Avoid Gold or Gold ETF:

My view on gold ETF even in the heydays have been like 'never get into it'. Look at gold as a consumption and do not look at it as an investment, says Dhirendra Kumar.

"I have been right of late but I still feel that the fundamental reason why people should not be looking at gold as an investment is that it does not produce anything, you are not lending money to somebody, you do not own anything," he added.

Something happened to gold five years ago which led to the blockbuster rally because of some external reason, the whole world was scared, equity crumbled, global financial crisi, Kumar said.

Gold is not supposed to be beating inflation and that is what the focus of any investor should be: to be able to beat inflation so that your money grows in real terms, which gold cannot do ever, added Kumar.