The only agenda for any investor is to multiply his money. Yet all too often we hear of stocks plunging south and an investor left paying a hefty price.
The fact is that investing in stocks is a game. You win some, you lose some, but as long as you make sure you're planning while playing, you'll come out of it with less than a scratch.
WHERE TO BEGIN
1. Prioritize
Before you've even begun to think about where to put your money, it's important to sit back and consider what your goals are.
It could be that travel's your thing and you get the bug yearly, or maybe you're the sensible sort and prefer to stick to saving.
Whatever your choice, once you've ascertained what your goals are, you'll know if it's long-term or short-term investments that suits you best.
2. Strategize
Your investment strategy should be based on your present finances as well as your personality.
Are you the sort that equates risk with a potential heart attack or are you a daredevil, who sees it as thrilling? Answering this tells you which investment style is best for you to stick to.
So, before you invest make sure you know your risk profile.
WHAT TO LOOK FOR
Once you've got your plan in place, it becomes all about the choices. There are so many options available in the market, so how do you know what are the best stocks to invest in?
Any company you invest in should deliver safety and profits. The constant volatility and market speculation makes it hard to tell which way the stock will go.
This is why it's important to dig way below the surface.
The best stocks are simply the ones that continue to grow. To identify if that's likely to happen, it's necessary to take the nitty gritty of the company into account.
1. Financials
The last ten years of the company's financials should be thoroughly examined. Earnings, balance sheets and cash flows over a length of time give a better insight into how the company has fared and what its profit potential is.
2. Quality
When inquiring into the quality of a company, a number of factors should be taken into consideration. The company must have a selling point, a key that's given it an extra edge. For some it comes in the form of a business monopoly, for others through timeless brands and new technologies.
The key to sustaining the growth of a company though, is always strong management. However, in isolation it cannot be the only driving factor.
THE END RESULT:
Once you've gotten a look at the bigger picture, it's easier to decide on the best stocks to invest in.
This unscattered approach to investing helps beat the stock odds and ensures the organized investor be a smart and successful one.
Kevin is among other things.. a fan of old school fundamental analysis of stocks and is madly obsessed with finding the best stocks to invest. A keen giver of free advice, Kevin evangelizes long term investing and on occasion can be disparaging of pure technical analysis and its proponents.