How to select stocks for investment

How to select stocks for investment

With hundreds of big and small companies listed on the stock markets, a new investor would always find it confusing to choose the best stock for investment. Since there are many factors that affect the process of choosing an appropriate stock, it is important to make sure you make your stock choices carefully. Check out some of the handy tips and ideas that would help you in the process of picking the right stocks.

A clarity on your expectations

Investing in the stocks is a process where you know what you want as an end result and the first tip to choose a right stock is to know what you want. If you are looking for short-term investments and high profits, your preferences of stock would be completely different and eventually your investment time and investment amount will play an important role in choosing the stocks for investing in BSE.

Begin with the best

Begin your investment in the stocks of those companies that are considered as the best in their breed. For instance, if you plan to invest in the cement sector, go for known names like J.K Cement or if you want to put your money in IT sector, opt for companies like TCS or Infosys. Although these shares might be priced on the higher sides, the risks related to them would be relatively low as these are trusted names and no matter how poor the performance is on a certain day, they would eventually build some good rapport and rates with time.

Previous performance

Although there is no guarantee that investing in a stock that has performed greatly in the past would surely yield great results in the future, you can still be sure of the fact that if their long-term performance is appealing, the risks would be reduced. Always monitor the performance of a stock over a substantial time frame to judge it clearly.

Avoid small/low-brand companies

Do not risk investing your money in the companies that you haven’t even heard of as they could be a spoof or dummy companies and might close down anytime. Instead, choose brands that belong to the high or mid capital groups to be sure. The risk factor involved with these companies that are known names in the market would be considerably low and thus you would be safe to a larger extent.

Dividends

Although not all the companies listed on the stock market pay dividends, but still try to invest in those companies that have dividend payout schemes. If the companies pay out a quarterly dividend, you would always be on the safer side in the game and thus your chances of making a lot more out of your investment would increase.

Recommendations

Go for the companies that are recommended across all stock analysis channels and platforms. The stock advises that are given by the professionals and experts of the industry can often be of a great help. Although don’t trust these advises blindly, shortlist a few names and then research about their performance on your level.

By RG

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