Stock market is known for its volatility. Many loose money because they try to time the market and many stay away from market because for them stock markets are synonymous to casinos!.
Equity market is for those who have patience in them and have a long term investment horizon ( of five years and above). If one invests only such money which he doesn't need for a reasonable time , he can definitely beat the returns from other modes of investment.
Rules that can work for a retail investor.
1. Unless you feel that you are a pro in identifying stars of tomorrow, minimise your direct exposure to equity. Outsource the function of equity investment to a specialist i.e take the mutual fund route.
2. Always prefer the SIP route. Systematic investments not only takes away the burden of timing the market but also it increases your returns by leaps and bounds( in a volatile market ). SIP also brings in a discipline of "paying yourself first".
3. Try to spread your SIP over a longer time period to spread and minimise your risk.
4. "Rome was not built in a day".So,be patient and never get out of funds in a hurry and always look for a decent time horizon. Trading only makes your brokers rich and not you.
5. Don't expect super hypothetical returns like 100% p.a. Set your expectations right .( 10-20% p.a). " Greater the expectations greater the disappointments are."
6. Always plan and change your investments along to align with the changing tax laws and to maximise your post inflation and tax returns.