Investing in the stock market is an exotic way of making money especially if you are planning for your retirement but it can also get expensive at times. But if you diversify your portfolio smartly you can end up earning well.
THE STOCK SCREENER:
If you are an amateur and you need a quick and smart way to start and learn your task the stock screener would be a great help to do that it’s also available with many brokerage houses. There’s a quick way to begin, and it’s available with many brokerages. You can easily get help with the stock screener by keeping an eye on your desired shares and it can also be your most liked candidate for further research. But finding candidates is just the start of the process, as investing in individual stocks requires a lot of work. You’ll need to:
- Research the various types of stock.
- Investigate and understand the company and its management.
- Research the industry.
- Financial evaluation, such as the balance sheet and income
- Go through the company’s quarterly reports.
- If you want your results to have, annual sales growth above a certain level, say 10% you can easily put your traits as well.
There are many ways to define a good company, but one of the major determining factors is the growth rate of a company. Companies growing at a quick pace are highly attracted by investors and valued immensely.Therefore, watch for companies that analysts expect to grow earnings greater than 10% annually over the next five years. You can increase this to 15% or even 20%. Earnings growth above
20% is very lucrative. Search for companies growing sales (also called revenue) faster than 10% or you can search for earnings or sales growth for the past five years instead.
VALUE ADDED STOCK:
- A value stock is a security trading at a lower price than what the company’s performance may contrarily demonstrate. Investors in value stocks attempt to make capital on incapabilities in the market, since the price of the underlying equity may not match the company’s attainment. Investors can find value stocks using an investing strategy by purchasing the 10 highest dividend-yielding stocks at the stock market and adjusting the portfolio every year there after.
- Common characteristics of value stocks include high dividend yield, low price-to-book ratio (P/B ratio) and/or a low price-to-earnings ratio (P/E ratio).
HOW TO EVALUATE A STOCK:
We are referring to stocks that offer good value for the money, and not just stocks with a low share price. There are plenty of stocks that offer a low share price, but in many cases, you may be getting what you paid for.
To evaluate a stock’s value, investors will often divide the current price of one of its shares by its annual earnings per share. The resulting number is called the price-earnings ratio, or P/E ratio. The lower the P/E, the cheaper the company is.
A feasible option of fractional share
By investing in fractional shares in lesser funds you can invest in big named companies. Partial shares of a company’s stock are what
actually the fractional shares, investing in a fractional share of stock can cost as little as a few thousand rupees. While a full share of stock may cost hundreds or thousands of dollars,
Investing in fractional shares has a number of benefits, the most significant being the low cost. In case you can’t afford to buy full shares of stock but you have an eye on that company, fractional shares will make it easy and helpful to dive into the stock market.
Or if you’re a new investor and just want to get plunged without investing any hefty amount of money, you can explore and learn
with fractional shares.
Moreover, it’s easier to diversify your investment portfolio with fractional shares. It’s wise to invest in at least 10 to 15 different companies in order to limit as much risk as possible. That would be very expensive if you buy full shares, but fractional shares make it much more affordable to invest in dozens of different stocks.
However not all brokers allow you to have fractional shares, they might charge per transaction amount and if you transactions are in dozen you can end up paying more of your earnings. Also, if you want to switch from one broker to another you might need to sell all your shares.Therefore its advisable to go for a proper broker and search smartly while you plan for investing in stocks.