Equity and Mutual Funds
Photo of author

Consistency For Equity Investors The key To Unfold A Bright Future

It is a proven fact consistency for equity investors is the key to making them wealthy. History shows multiple evidence to get higher return if a long term investor consistently upgrade his portfolio time to time. Stock market has proven to be the best investment instrument which can beat inflation at a big margin.

It is essential for all investor to make a good wealth in a long period of span for their future life or retirement life or may be higher education for children. Stock market investment is the best instrument for them because these are the only asset that can out perform the inflation over long period of time. If we find the data of Nifty 50, it shows 14% CAGR during last 20 years.

Fundamental Analysis and Consistency For Equity Investors Help Wealth Creation

Before investing a great part of your long term wealth creation through equity, it is very important that you know exactly what type of investment is stock investment. Stock investment is equally buying a share or unit of ownership of a company. The amount of stocks you bought from such a company will provide you some benefits like voting right and receiving profits whenever company sharing time to time to the share holders.

Amount of receiving profits depends on the amount of ownership share you own to such company. One of the best feature of stock ownership is that share holders are totally free from all liabilities of the company. But if company loses a lawsuit and pay a huge amount for penalty or any other cause you must prepare for the worst. Since such happening often lead rendering your stocks worthless means huge losses.

That’s why you need a proper financial adviser to protect such losses and sell all shares in time. Investors also should analyze company’s news time to time they release and keep an eye recent progress of all trending news related those companies and take necessary steps to prevent losses in time. Before implementing any financial strategies you need to know the fundamental analysis of the company.

The stock analysis is provided by the broker’s research team in all broking house. The fundamental analysis involves the process of examining the basic fundamental financial level of the company’s business which you are eyeing to buy some stocks. It also include the analysis of key ratios of business in order to focus it’s financial health to determine the current worth and market value of the stocks.

In stock investment your concern is more on the ability of making profit or generate money now or in the future from the company. Earning are the profits that is hard to predict but that’s what buying stocks is all about. An increase in earnings or profits basically leads to higher on stock price and usually result to a regular dividend.

Which Stocks Are Favorable for Long Term Equity Investors ?

Investing in conservative blue chip stocks can be highly rewarding. Evidence shows good quality stocks always have outperformed other investment asset classes over the long term. Investing stocks has generated 11% to 15% of annually return depending of how aggressive you are.

Another important step for investor is stock picking. Which stock should you buy for your short term or long term benefit and how ?

Stock picking is a very complicated that has different approaches for different investor. However, it is wise to follow the general and simple easy steps to minimize the risk of your investment. The only and all time law in the stock market is “buy in low and sell on high” is the only method that gives you profit.

Decide on the time frame and general strategy of the investment. This step is very important. Because it will dictate the type of stock you are going to choose. Suppose you decide to be a long term investor, you would try to find stocks that have sustainable competitive advantages along with stable growth.

The key for finding these stocks by searching of the historical performance of each stock over the past decades and need to do a simple S.W.O.T. (Strength-Weakness-Opportunity-Threat) analysis on the company. This will help you to make a list of stocks that is consistent to your time frame and strategy.

Once you have a list of stocks to buy. you would need to diversify in a way that gives the greatest Risk/Reward ratio with the help of your portfolio manager. It is most crucial to decide how much portion of your stocks will be allocated to which sector. Otherwise you can talk to your portfolio manager to conduct a Markowitz Analysis for your portfolio to decide how much money should be allocated to each stock.

These steps should get you started in your quest to consistently make money in the stock market. They will deepen your knowledge about the financial market. These knowledges would provide a sense of confidence that make you to better trading decisions and manage your portfolio consistency to generate the long term profit that touches your goal gradually.

Leave a Comment