Today I am going to share with you on investing tips for beginners. Let us delve into the topic rightaway!
Number one. Invest only in companies that you are familiar with. Consider Warren Buffett’s advice. Never invest in a business you cannot understand. What companies provide products and services to you and your family frequently? Companies that are visible and ubiquitous at ground level can be worth investing in. Some of these companies give out dividends too. And dividends can be a great source of passive income.
Number two. You need to know the fundamentals. There are important financial figures and ratios that you should know such as revenue and basic earnings per share. Earnings per share or EPS can give a rough indicator amount of a company’s profit allocated to one share of its stock. Besides this, it is also good to check the company’s recent profits and compare that to the expectations of financial analysts. Does the company usually beat or fall short of EPS forecasts?
Number three. Learn about technical indicators to spot trends. You can learn how to use chart patterns, trading volume statistics and other technical indicators which can help you decide when to buy or sell. This can help you assess what direction a stock has been moving and where it is likely going.
Number four. Do your numbers-based assessments. Start with the Price To Earnings PE ratio. This measures whether a stock is overvalued, undervalued or about where it should be. PE ratio measures how much investors are willing to pay per dollar of a company’s profits. Compare a company’s PE ratio with its competitors in the same industry and compare it to broad market benchmarks such as the S N P 500.
Number five. Do not make emotional driven decisions. Markets can go up, down and sideways due to different factors. Learn not to be driven by your emotions when investing.
I hope this video helps you in being one step closer to your financial goals.
Reference: https://www.schwab.com/learn/story/stock-investment-tips-beginners
