Accountant
82 Points
Joined May 2018
If you want to invest in stocks, then remember these four main things.
1. Select the right company - Choose profitable and better companies who have earned at least 20% profit on their shareholders' capital.
Ideally, a long-term investment (over 5 years) allows you to participate in the company's development.
The performance of shares in a short duration (3 to 6 months) is less than the company's original theory and motivates more than market prices. While the relevance of the right price decreases in the long run.
2. Stay informed - investing in stocks is a long learning process, in which you learn from your mistakes. These are some facts that can make this process easier.
Diversity in investment - Do not exceed 10% of your fund in any one stock, even if it is a gem, on the other hand, do not invest in too many stocks as it is difficult to monitor them. For a less active long-term investor, 15-20 different stocks are good numbers.
Use this asset allocation tool to determine whether you need to make an additional investment from shares.
Keep analyzing your company's performance with its quarterly results, annual reports, and news articles.
Find a good broker and understand the settlement system.
Do not pay attention to the hot tips because if it really worked, everyone would have been crorepati.
Avoid the temptation to buy more because each purchase is a new investment decision. Buy as much as a share of a company as per your total allocation plan.
3.Monitoring and review - Regular monitor and review of your investment. Keep an eye on the announcement of the results of the quarterly results of the stock and at least once a week, write down the improvement in stock prices on your portfolio worksheet.
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Apart from this, also check that the reasons for which you had purchased the shares before, are still valid or there have been significant changes in your earlier estimates and expectations. Also, adopt an annual review process so that you can check the performance of equity shares within your total asset allocation.
If necessary, you can review RiskAnalyser because your risk profile and risk capacity can change over a period of 12 months.
4. Learn from mistakes - Identify and learn from your mistakes during the review, because no one can beat your own experience. This experience will be your 'pearl of knowledge' which will definitely help you make a successful stock investor.