8 Important Features To Consider Before Stock Investing ..!

The return on equity investment lies in choosing the right company stock. It is important to note the 8 key features. 1. Avoid share tips Many of us have been investing in company stocks based on tips. It is better to avoid that habit. It is a good idea to do some ‘homework’ before starting a stock investment. That is, it is important to know about the company you are going to invest in by reading the company's website, investment advisory, and stock referral companies' websites. 2. Investment period You should only invest in company stocks if the investment period is at least three years. The reason is that the share price is subject to that level of inflation. Generally, stock market investments are compared to a roller coaster. Therefore, only those who have the strength to withstand the volatility of the stock price should engage in stock investing. If your investment period and financial target period is about 3 years, you can invest in stocks of companies that do not have high inflation in stock prices and pay good dividends. Shares of companies listed on the Sensex 30 and Nifty 50 are less likely to be high risk as their balance sheet is good. If the investment period and the financial target period are more than 3 years and more than 5 years, you can invest in company stocks with more than 150 companies out of 50 stocks in that type of high-risk stock market. You can invest in high risk stocks if the investment period and the financial target period are more than 5 years. That is, you can invest in mid-cap and small-cap stocks. The longer the investment period, the longer it will take for stocks to rise again. 3. Investment strategies In general, when it comes to equity investing, there are three main types of investment strategies: value investing, growth investing and income investing. In a value investing investment style, a company's stock is invested in a position where the valuation is lower than other stocks in the same sector. Warren Buffett, one of the world's leading stock market investors, is making a profit by following this pattern. The share of companies that continue to excel in generating revenue and profit is called the Growth share. Investing in these stocks is called Growth Investing. The price of these stocks will be higher. Income Investing is the process of finding and investing in shares of a company that pays high dividends. Dividend refers to the profit growth of a company. A company that consistently pays high dividends to investors can be said to be a good company. Dividend income available in one year is the amount of bank fixed deposit that can be profitable. Value Investing is ideal for high risk takers. Growth Investing is right for those who take moderate risk. Income Investing is suitable for low risk takers. By investing in a combination of these three types of stock investment styles, one can reduce the risk of the stock portfolio in the long run and provide a higher return. 4. Company Basics Before investing in a company, it is important to consider the fundamentals of the company. Only if the foundation is strong will a building be sustainable. Who is the founder of a company in that category and how is its sales? How profitable is it? The investment decision should be based on a thorough examination of what future growth will look like. The future growth of the company of the company you are going to invest in, you should make the decision to invest in that company only if you like the performance of its founders. 5. Debt free company ..! Try to invest in debt free company stocks as much as possible. There may be a small amount of debt. It would not be a mistake if the loan was purchased to expand the business. Avoid investing in the company's stock if you have taken out another loan to pay off one debt. The interest payable on the loan will reduce the profitability of the company. 6. Founder's share capital Consider how much of a company's shares are owned by its founder or founders. If the share capital of the founders is very low then it is necessary to invest considering the reason for it. If the share capital of the founders continues to decline, it is better to get out of it if you have already invested in that company stock. 7. Investment by investment companies .. If mutual fund companies, insurance companies, and foreign financial institution investors (FIIs) have invested heavily in a company's stock, that stock may be considered for investment. These companies will always invest in select stocks that are profitable. 7. Higher stock market value ..! The market capitalization of a company should be somewhat higher. The lower the value, the higher the risk of investing in a company. That does not mean investing in stocks with very high market capitalization. You need to invest in large cap stocks, mid cap stocks, small cap stocks depending on your risk taking ability and investment period. It is always profitable to invest in a combination of stocks with different market capitalization value. 8. High volatility in stock prices Some company stocks are seen with high volatility. In some company stocks the price may not be very high. It is better to choose stocks for investment according to the risk taking ability of the investor. In general, a short-term 15%, 20%, 30% decline in stock market investment is all too common. Corona - 19 Even the price of many good company stocks fell by 50% or 60% in the early days of the impact. Therefore, the stock market can fall at any time. It is essential to have the ability to attack it. Warren Buffett says those with risk aversion should come into the stock market even if the price of a stock drops by 50 percent after investing. Therefore, it is advisable to make a small investment in the stock market first, gain experience thereby and gradually increase the investment amount. Also, do not hesitate to invest in good company stocks if the overall stock market falls. Also, it is important to have cash ready to invest then. Dividing and investing Basically no matter how strong the company is, no matter how good the stock, the total investment should not be put in a single stock. Doing so will greatly increase the risk on equity investment. In response, growth should be done by selecting five sectors and splitting the investment into several company stocks based on them. Also, do not always make a total investment in stock market investment. Divide the investment amount by 5,6 and make the most of the market downturn. There is a possibility of higher returns in the long run by splitting the investment in the above mentioned company shares according to the risk taking capacity of the investor.

Share: