Moving from a mutual fund to the stock market is a big step for the investor. With more returns comes more risks. Therefore, to survive in a market as volatile as this, you have to conduct tonnes of research. However, if you have a job that does not entail you to get involved in this business, it might become difficult for you to do your investigation before investing. With this condition, a lot of people end up with more losses than profits.
Let us put an end to this misery and tell you that there’s a way you wouldn’t have to waste much of your time googling about stocks and raking in profits as well.
Know what you are investing in
If your only motivation behind investing in a company’s stock is that most people are going for it, don’t do it. Avoid buying stocks if you are not aware of the operations carried out by the company. When we say research, what we really mean is the analysis of the market and the company alongside.
Some questions that should be able to answer before getting a stock:
- What services do they provide/ What products do they manufacture?
- Where are they based out of?
- Which countries have they expanded to?
- How are they currently doing in the market?
- Would they rank towards the top of their field?
It will only take you one Google search to account for all this information.
Read more: Long term investment ideas in stock market
Are the price-to-earnings ratios worth it?
The price-to-earning or P/E ratios refer to the relation between the price of a company’s stock and the amount it earns for each of them. To understand whether it is high, low, or standard, you would have to do two things — compare its P/E with other similar companies and contrast its current P/Es with that of its previous quarters’.
What is the beta here?
In simple words, beta refers to the volatility your company shows. The stock market is a risky place, but some happen to be more than the others. Usually, you will come across all the information regarding beta at the same place you find P/E.
For example, if you are a newcomer, an online casino today would be a good place to invest since they offer low volatility or low beta.
Dividends don’t require much attention
The only source of stability in a stock market is dividends. It translates to a steady income that you can receive from a stock despite the volatility in its price. Therefore, most traditional investors who don’t have much time in their life go for dividend-paying organizations.
Read more: How to invest in stock market
Sometimes, they pay through cash in quarters, but some companies also distribute more stocks instead of cash. Another thing to keep in mind is that not all companies believe in dividends; therefore, make sure your company does before buying its stock. Mostly, large and renowned companies from the oil and gas sector, pharmaceuticals, and HealthCare roll out dividends.