I CONFESS. I flirted with the idea of using the stock market to finance the beach holiday I desperately need but could not afford.

The party that the index kicked off had tempted many like me to ride the wave with a few 'stock tips' that were doing the rounds. Common sense prevailed. I refrained. If it was that easy to make money, wouldn't we all be sunning ourselves 365 days a year?

My friend Ratan was made of less stern stuff. Swayed by the rising index, he invested Rs 20,000 in a few shares his friend recommended. He waited for his money to double before pulling out.

Sadly, the next day, the market crashed 500 points. He panicked about a further fall and sold low, which not only took away his dream vacation, but a bit of his savings, too!

Where did the poor chap go wrong? Well, in every way. Unfortunately, he became a poster boy for what NOT to do while investing in the stock market. Let us count the ways.

1. Rush!
Fast is never a good idea and certainly not in equity. Short term goals cannot be met through stock markets. The fundamental rule is, you stay invested no matter what.

Certified Financial Planner Gaurav Mashruwala says, "For financial goals less than two or three years away, choose debt products. You will lose to inflation but the impact will be negligible. For distant goals, choose equity."

Illustration: Vaibhav Shirke