The stock market can be viewed in different ways, as a bet, as the option of getting high returns, as an interesting investment as risky experience or a combination. Whatever your approach, here are some factors to consider before and during the equity investment.
Sector where the company operates: Before investing is important to assess the sector in which to place part of the resources, depending on the investment it will be more or less risky and thus vary the returns expected. Taking this approach, you can select which are the main news and events that have a direct impact on your investment.
Quality of management: You need to know who is behind the company which will be reversed. Probably the names of management staff alone can not express anything, but will be encouraged to investigate and in some cases learn some of high renown that will give you confidence.
Costs associated with operations: Before performing any purchase or sale of shares, make sure you know all the costs we incur, such as entry and exit commissions, profit tax, tax on dividends received, costs transfer, maintenance costs, among others. Since all of these have a direct effect on the profitability of investment and in some cases may reduce it. This point is very important if you want a very active management of its portfolio.
Time horizon: This point has significant influence on return on investment. Contrary to popular belief, the stock market is long term, as it is shown that the longer the investment, but not to neglect, the results obtained are better than other investments. The duration will depend on its investment objective, if short-term speculative will, if long-term will be appreciative.
What resources do you invest?: Varies depending on the investment profile of each. In general, it is suggested that those funds are intended not required in the short term, regardless of their strategy (aggressive or conservative), it is best to not commit resources that you may need in the immediate future.
Diversify: You need to place their resources in different sectors, at least in two. Diversification from the sector must sometimes feel that because we have a diversified portfolio invested in several companies (5 banks pharmaceutical or 5). What if I drop the banking sector? The important thing is that they can gain an adequate distribution of resources to reduce the risk inherent in equity investments.
How many stocks to buy for the portfolio?: This point is closely related to diversification, but we can say that there is no magic number of shares to have the portfolio to ensure success. The important thing is to take into account the amount of money being invested and the time you have to follow their investments. Always think that each company to log into your portfolio is a business that is involved and therefore think that if I had to monitor every business or have weekly monitoring committees, business How many committees can visit or attend and succeed in management?.
Benefits: Identify actions to provide benefits on a regular basis, so you will be able to reinvest dividends and increase their assets, these are ideal strategies for medium and long term because they can deliver sustained growth.
Get Smart: Find out in detail the company you’re investing, to be engaged, what are its main lines of business, what is your position in the market, selling, buying. Do not be left only with the trend of the market or the opinion of some analysts, it is important that you feel comfortable with the investment being made and know where you are placing your money.
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Tags: Investing in stocks, Quality of management, when investing in stocks, you're investing