Which is the best investment plan in stock market?

Best Investment plan means the plan that maximises your returns with the given level of risk or should minimize your risk for given level of returns. Now to reduce risk for given level of returns or to increase returns for givn level of risk  you need to make diversified investments in different stocks

Let’s see what is diversification and why it is important.

Diversification  is a technique that reduces risk by allocating investments among various financial instruments, industries, and other categories. It aims to maximize return with reduced risk. Now here we are talking about bestinvestment plan in stock market so we are talking only about diversification in different stocks.

Let's say you have a portfolio of only oil stocks and any adverse price movement comes in crude oil  then share prices of oil stocks will drop. Your portfolio will experience a noticeable drop in value.If, however, you balanced the portfolio with a couple of pharma stocks, IT or banking stocks, only part of your portfolio would be affected due to oil prices.

Diversification is not limited to  only  industry, diversification should also be  in selection of stocks with different market cap or market share of stocks in their products or services sales in overall industry, stocks in different stage of life cycle like some must be growing stocks other must be already grown strong companies with huge market share in their products or services, etc.

This diversification is best done with the combination of Multibagger Stocks + Value Pick Stocks. Now what are these Multibagger and value stocks, let’s get idea of both of these. 

MULTIBAGGER STOCKS is an investment jargonwhich is used by market participants to describe anequity stock which gives you multiple times returns. Now they give such huge returns as money is invested in high growth investment stocks that is stocks of companies with huge growth potential. Generally small cap and mid cap stocks has such potential or stocks of companies that have small share of services in their industry but have huge scope to grow its market share. Generally such stocks rise with highest potential in bullish market and outperforms market returns but corrects also more than market so these are high Beta Stocks.

VALUEPICK STOCKS as its name signifies are undervalued stocks of strong companies, they are large cap stocks with large market share and stable growth rate. When such stocks are trading below their intrinsic value i.e. discounted price of future cash flows  is more than market price they become good bet to buy for value investors due to positive margin of safety.Value stocks generally have goodfundamentals but become undervalued for many reasons like fall in overall market, economic crisis, industry specific some bad news, company specific scandal, etc. But if the company’s financials are still relatively solid, then smart money jumps in at that point, as they know its temporary hiccup and the price will be back on or above its valuations. 

Now why this diversification is best among others?

When market corrects then large cap stocks are the best bet due to their safe nature and when market are rising or consolidating then at that time growing companies stocks gives best returns by investing in both we are benefitted on both the sides.