Investing in the capital market of Bangladesh is always tricky and requires better planning to achieve a positive return. Without a solid understanding of the market, it may be difficult to make a profit.

Initially, it would be better to start investing through IPO (initial public offering) subscriptions before moving on to the secondary market. Here are some investment tips for beginners interested in investing in the capital market:

Start with a solid understanding of the stock market

Before investing, it's essential to educate yourself on how the stock market works, including the various financial instruments, investment strategies, and risk management techniques. This will help you make informed decisions and avoid costly mistakes in future.

Set your investment goals

First, determine your investment objectives. It is important to understand what you are expecting when investing in a stock. It may be short-term or even long-term. What will be your strategy if your expected return exceeds?

Second, your risk tolerance—the capacity to take the stop loss in case of day trading – showed be looked into. This will help you determine the appropriate investment strategy and asset allocation.

Diversify your portfolio

Spread your investments across a variety of assets and sectors to minimise your risk exposure. This will help you balance your portfolio and reduce the impact of any single investment's performance.

Invest in the long term

The stock market is volatile and short-term fluctuations are normal. Invest in the long term to reduce the impact of short-term market fluctuations on your portfolio.

Don't time the market

Trying to time the market is a risky strategy. Instead, focus on buying quality stocks at reasonable prices and holding them long-term.

Keep an eye on the creditability of brokerage house and transactions fees

It is always wise to open a beneficiary owner (BO) account with a reputed brokerage house for your investment's long-term safety and to avoid any type of scams. Similarly, be aware of the costs associated with investing, such as brokerage fees, interest rates and account maintenance fees. These fees can eat into your returns over time.

Tax rebates while investing

Investors in Bangladesh's capital market can benefit from tax incentives such as exemption from capital gains tax. This implies that investors will not have to pay taxes on profits earned from the sale of shares held for more than 12 months.

The government also provides tax rebates to encourage investment in the capital market. Investors can claim a rebate of up to 15 per cent of their investment in the capital market in their tax file. Additionally, there is a provision for tax exemption on dividend income from listed companies of up to Tk 50,000 per year for individual taxpayers.

Monitor your portfolio

Keep an eye on your investments regularly and adjust your portfolio as needed to ensure that you are on track to achieve your investment goals.

Remember, investing in the stock market carries risks and returns are not guaranteed. It's better to always consult with a financial adviser before making any investment decisions.

The author is the head of operations and compliance at UniCap Securities Limited. He can be reached at shahriar@unicap-securities.com