Ask Value Research

Avoid Derivative Investments

Derivatives are highly speculative & investors who don’t understand them should stay away…

I have opened a new demat account. I am new to equity investments, so what are the steps that I should take to invest in shares, derivatives and F&Os?
-Vipul

Since you're a new investor, we would request you to stay away from derivatives and futures & options (F&O). If you want to invest in shares, choose the company to invest in very carefully. Invest in companies that you know adequately about. You can also take the help of someone who has the knowledge and expertise of investing in shares. But avoid derivatives because they are a high-risk investment avenue. They promise high returns, but there will always be the possibility of high losses. Derivatives are highly speculative, and till you deeply understand them, you shouldn’t get tempted to invest in them.

This article was originally published on March 09, 2012.

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