Stock Investing is not as simple as one would predict it to be. Only having requisite cash for spending doesn’t help the cause. With the cash you should also possess an analytical mind that have the ability to take calculated risks that could be paid of. Stock investing has dual dimension after all and it is not like buying simple stuffs from the market. With the purchase of a share you are also carrying with yourself home a risk as well as an anticipated return. There is an ultimate risk that the company may get liquidated in the future. On the other hand the company could make significant profits that are returned to the investors in the form of bonus.
Always watch out for certain factors before you opt for making an investment. First you should have a proper strategy and a plan B in your mind in case things do not turn out as expected by you. You should always control your emotions in this trade since it can kill you of literally. You should never get bogged down by the initial losses you might suffer as a starter. This is the time when you should learn new things and not earn. Earning comes after learning the techniques required in this field. You should never run after the rumors and always be specific in your steps.
Now when you finally decide on investing there are different options available in the market. Either you can invest in a short term investment or put your money in a long term commitment. In both case certain factors should be considered. You should take a look at the company’s history, track record of its promoters, dividend payout ratio, retained earnings, short term and long term obligations, book value, price equity ratio and the overall balance sheet. With a proper study of these economic indicators you’ll get an idea of the economic strength of the company and hence make your task easier.
Long term investors are of two types; those who buy penny stocks during recession and sell them at the time of boom. The other types look for a high value stock with a good prospect and retain them until next year or may be for a longer period of time. There are also certain groups who go by the market price and invest only in those stocks whose value is relatively low expecting them to hit an all time high. These groups are always likely to fall flat on their nose. A short term investor on the other hand should look for more volatile stocks that could provide him a sufficient margin. In this way stock market is a gamble if you do not play your cards correctly.