Volatility is a long term’s best friend provided if you have knowledge and Patience.
Is investing in stock market risky? Is the stock market risky for the money? Do you think to invest in stock market risky and losing your money? People, who invest are risk taker? What extent of risk a do an investor take? What are the stocks you should buy? These are the common questions every one come across.
No, it is not. Investing is not a risky venture. If you are aware of trends and situations of the market then you can make more out of stocks market. It just needs proper knowledge. If an individual is vigilant enough and aware of the situations and trending of the market you can earn. A good investor always needs to learn first then he can earn.
There are three secrets of the Stocks Market
- Only wealthy people understand inflation.
- Lower the risk and higher the return.
- The easiest way to get rich is by buying stocks.
We all know with the increase in inflation, the purchasing power of money is decreasing. The value of money today is not the same as it was 10 years ago. To overcome inflation, we must start investing. Lower the risk higher the return, we can achieve it by having proper knowledge about the trends of the stocks market. There are many ways to make money but investing in stocks is the easiest way to earn.
- Stocks paying dividends: there are many types of stocks which are various types. One must go for the stocks which are paying dividends not interest.
- A company which has low corporate taxes.
- Stocks must be long term.
- Debts of the company must be Zero if a company have more debt. It must be low.
- An investor should give more preference to the company’s in which the senior management of the same company has invested.
- An investor must analyse the management of the company. If company is keep changing its senior management then it is not good sign.
- An investor must compare the salary of the senior management with company’s profit growth. Senior management includes- Chairman / CEO (It includes their basic pay, incentives excluding dividends).
- A good company must continue with the same auditors and other outsider party, if there is frequent change in the auditors or abnormal increase in their salary, then it is not the good sign.
- An investor must look for the history of the company.
- Competitive advantages: investors must invest in the company’s stock; whose product have more advantages over its competitions.
- Investor must look for the stocks whose product better control over market and less switching cost.
- Company who have more intangible assets.
Stocks must be Avoided
- An investors must avoid the technological stocks because it is highly unpredictable. Introduction of any new technology lead to the downfall of existing technology.
- Pharma Industries because,
- High cost of Research
- More Approval and legalities.
- Government Regulations
- Any Regulated Industries like Mining, Telecom and Agriculture industries.
Higher the knowledge lowers the risk.