Even for those who are experienced, the stock market can be a challenge. When there is money on the line, events often don’t go as predicted. Adhere to this advice for safer and more lucrative investments.
Do not give your money to an investment broker until you have thoroughly researched the company, using all the free resources you can find. When you spend time doing the necessary background checks, you reduce the risk of becoming a victim of investment fraud.
Use your voting rights if you own some common stocks. Your vote can impact leadership of the company, or decisions regarding big changes like mergers. Voting occurs during the company’s annual shareholders’ meeting or through the mail by proxy voting.
Put at least six months worth of living expenses away in a high interest account in case something happens to your job. This allows you to cover medical bills, unemployment costs, or even damage from a disaster which might not be covered by insurance until you get your affairs in order.
Earnings Growth
The return you desire should influence the type of stocks you purchase, for example, if you need a high return, look to stocks that are doing better than 10%. If you want to estimate your likely return from an individual stock, find the projected earnings growth rate and the dividend yield and add them. So for example, with a stock that has a 12% earnings growth and that yields 2% could give you 14% return in the process.
Give short selling a try. Short selling involves “borrowing” shares for a set period of time. An investor is loaned shares with the agreement that they will deliver an equal number of shares in the future. Then, the investor will sell the share and when the price of the stock decreases, they will be repurchased.
Exercise caution when it comes to buying stock issued by a company that employs you. Although it seems good to support your company by owning its stock, there are certain risks involved. If something negative happens to your employer, both the value of your portfolio and your paycheck could be threatened. However, if employees can buy company shares at a nice discount, it can be worth investing some of your money in the company.
Don’t listen to stock tips or recommendations that you didn’t ask to hear. You should listen to your advisor and find sources of information you can trust besides listening to successful traders. Ignore the other speculation from other sources. A significant amount of stock advice comes from those who are paid to distribute the information and does not equal doing your own homework and research.
Penny Stocks
Don’t put all your faith in penny stocks if you’re hoping to hit it big in the market. Although they pose a much lower risk, penny stocks will not give you the growth and interest rates of blue-chip stocks, so this is something to think about. Be sure to invest in both growing and major companies. Find stock opportunities provided by companies whose numbers are consistent across the board in terms of growth.
Cash is not necessarily the same thing as profit. Look at your own financial situation as a business that requires a certain amount of cash flow. While is it nice to be able to reinvest some cash or spend some of your gains, you have to keep money on had so you can afford paying your bills. Make sure you have half a year of living expenses stored in a safe location in case something were to occur to you.
As aforementioned, there are several things you can do in order to make sure that your stock market investments are as secure as possible. Instead of risking money, apply the tips you have just read to earn the best return.
