Do you want to invest in the stock market? If you have good knowledge of this market then you could invest in it directly otherwise opts for the mutual funds. If you are not interested in mutual funds and want to invest in stocks directly then keep care on the following thing to get a better return in the future.
Know the background of the company in which you want to invest: For this you have to collect date about the gross profit, Earning before interest & tax, Earning before Tax, Earning after Tax, earning per share etc.
Invest for long term: You could not understand the right performance of share properly in short term. To get a better return, take the longer time.
Collect & Interpret data available in the market: Collect annual reports of the company from the websites of NSE & BSE. You could also take more information from the newspaper, company’s website & brokerage house’s sites. After collecting these data, interpret it to take a final decision.
Do not perform emotionally & keep your emotions in control: If the share price goes down then does not become panic. It might happen that it will take a new hike in the future. So, always think intellectually not emotionally.
Ratio Analysis: Ratio analysis also plays an important role in choosing the right stock. Low PE, low PB, high dividend yield & low debt to equity ratio are good shine for any stock.
- Price to Earnings Ratio: it is the ratio of price of a stock to the company’s earning per share (EPS) and compares the price of the share from the earning per share.
- Price to Book Value Ratio: It compares the price of a stock with its book value (net value of the company’s total assets minus its liabilities).
- Debt-to-Equity Ratio: It measures a company’s influence by comparing its debt with its equity base.
- Asset Turnover Ratio: The ratio measures the sales generated from the asset of the company and shows a firm’s efficiency in using its assets to generate revenue.
Buy the stocks of different sectors; monitor it on every month basis. Sell the stock when it is overvalued and buy the stocks when it is undervalued. You could also sell your stock when you have found a better stock option in the market.