Points to note over here and Possible Scenarios:
Here’s a look at the top 5 important questions that any enthusiast must ask before investing in their money for stock purchase.
Investment, for most individuals, is about spotting the best stocks to purchase. Actually, the main concern is to determine how to make real profits from the type of stocks to make investments in. When you are trying to buy stocks in India, it is essential to answer these 5 important questions.
- Which stocks should you purchase?
Every stock investment involves plenty of decisions. You have to find businesses that are sound in operations and finances, and are run by a reliable and capable management team. Look for stocks of businesses that are well recognized and financially strong. These stocks tend to do well over a long period. You need to invest enough time and skills to find these businesses.
- What are the prices of stocks?
Even after you identify the best stocks it is unwise to immediately purchase them. You have to evaluate their costs and find out whether the pricing is right. It is possible by conducting proper research about business competitors, financial parameters, sector analysis as well as different types of factors that can have an impact on the company stock. You should determine whether the stocks are overvalued or undervalued, or valued fairly.
- When should you purchase chosen stocks?
Once you are aware of the stocks to purchase and the prices to buy them in, the stocks of choice can be undervalued or overvalued. As an intelligent investor, you should always purchase stocks when they are undervalued.
- How much time to hold the stocks for?
Equity investment is most preferable for long-term. If you choose a stock with care and are prepared to hold company stocks for a minimum of few years, there is high potential for profit generation. An undervalued stock can take some years to reach its complete potential – whether it comes to growth in valuation or business. You should hold stocks of well established businesses for 3 – 5 years at minimum, particularly if you have confidence about a growth in their valuation and expansion.
- When is the best time to sell stocks?
The sale of a stock is important for achieving your profits and progressing with your wealth generation. If you do not immediately need money for any emergency purposes, it is wise to only sell your own holdings when there are minimal prospects for future growth, previous growth in business has not satisfied expectations or the valuation of the stocks has become too high and you can find investment options with more reasonable valuation.
Blog by Ride2Rich – India’s #1 Multibagger Stock Advisory