Beginners must always approach the Stock markets very cautiously. Over the years, equities have given higher returns than any other form of investment. But let's remember that there are thousands of corporates operating in different industry sectors, having different business models with different strategies of business development. Methodical and tactical investments will always help beginners to build a solid stock portfolio. If you are a beginner then you must follow the below steps:
1. You should never enter the market solely based on the recommendations of others. It is very risky to enter stock markets when they are at their peak. You must evaluate the macro-economic and micro-economic scenarios by doing good amount of research on your own. This will help you understand if it is the right time for investments.
2. You should never buy a stock because someone said that it is the best stock for investment.
3. You must first evaluate the different industry sectors and try to understand which factors will help these sectors grow over a period of time. You should choose only those sectors that have shown good performance over a longer horizon. Also, ensure that the current global indicators and government policies are conducive to the growth of these sectors.
4. Once you make a choice of the sectors, the next step is to select the companies that would perform. The general trend is to go with big large capital companies. You might choose to follow this trend but you should make a discrete and unbiased decision. You should select companies that have performed over the years and have shown considerable growth potential even during tough times. Evaluating the company's results for the last 12 quarters would give you sufficient inputs to make the decision.
5. In today's world, corporate governance stands significant value. So, another foremost thing that you must remember is to select companies having good track record. A clean track record without any pending legal cases would make your selection simpler.
6. Some fundamental pointers to help you make the stock selection decision are the earnings per share (EPS), the Stock's P/E ratio in comparison with other stocks in same industry sector, Book value of the company, the Stock's dividend yield, Company's guidance for the next few quarters and more than anything the company's roadmap and vision.
7. Once you have made the choice of your stocks, the next step is to buy them. The best strategy for buying stocks is by buying them in small quantities at specified intervals of time. This method is called Systematic Investment Plan (SIP). In SIP, you can set yourself to take weekly, fortnightly, monthly or bi-monthly exposure of stocks. All Stock markets are news driven and they tend to fluctuate based on the prevailing economic scenario. Your stocks are also bound to fluctuate. The advantage of SIP is that you get exposure to all these fluctuations and you could even decide to increase a particular stock holding during a Stock market crash.
8.The last and foremost thing to remember is to have patience and keep on re-assessing the stock performance at periodic intervals.
Stock market investing for the beginner can be really exciting and rewarding if these steps are followed.
http://expertscolumn.com/users/samprad78
All copyrights reserved by Sameer Devalekar
1. You should never enter the market solely based on the recommendations of others. It is very risky to enter stock markets when they are at their peak. You must evaluate the macro-economic and micro-economic scenarios by doing good amount of research on your own. This will help you understand if it is the right time for investments.
2. You should never buy a stock because someone said that it is the best stock for investment.
3. You must first evaluate the different industry sectors and try to understand which factors will help these sectors grow over a period of time. You should choose only those sectors that have shown good performance over a longer horizon. Also, ensure that the current global indicators and government policies are conducive to the growth of these sectors.
4. Once you make a choice of the sectors, the next step is to select the companies that would perform. The general trend is to go with big large capital companies. You might choose to follow this trend but you should make a discrete and unbiased decision. You should select companies that have performed over the years and have shown considerable growth potential even during tough times. Evaluating the company's results for the last 12 quarters would give you sufficient inputs to make the decision.
5. In today's world, corporate governance stands significant value. So, another foremost thing that you must remember is to select companies having good track record. A clean track record without any pending legal cases would make your selection simpler.
6. Some fundamental pointers to help you make the stock selection decision are the earnings per share (EPS), the Stock's P/E ratio in comparison with other stocks in same industry sector, Book value of the company, the Stock's dividend yield, Company's guidance for the next few quarters and more than anything the company's roadmap and vision.
7. Once you have made the choice of your stocks, the next step is to buy them. The best strategy for buying stocks is by buying them in small quantities at specified intervals of time. This method is called Systematic Investment Plan (SIP). In SIP, you can set yourself to take weekly, fortnightly, monthly or bi-monthly exposure of stocks. All Stock markets are news driven and they tend to fluctuate based on the prevailing economic scenario. Your stocks are also bound to fluctuate. The advantage of SIP is that you get exposure to all these fluctuations and you could even decide to increase a particular stock holding during a Stock market crash.
8.The last and foremost thing to remember is to have patience and keep on re-assessing the stock performance at periodic intervals.
Stock market investing for the beginner can be really exciting and rewarding if these steps are followed.
http://expertscolumn.com/users/samprad78
All copyrights reserved by Sameer Devalekar
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