Many people have profited from investing in the stock market. Many also had reported losses when they invested in the stock market. That's just how stock market investing is, you either gain or you lose your investment.
Every stock market investor knows that picking the right stocks to invest in can help bring your portfolio in the black. There is, of course, no definite guarantee that a stock will always yield gains instead of losses. By choosing the right stocks to buy you lessen the risk of losing your investment.
The question is, how do you choose the right stocks to add to your portfolio? Choosing the right stock would depend on of several factors. Take note that a company need not have all the factors as mentioned. It all depends on how all these contribute to the “health” of the company.
Factors to Consider When Picking the Stocks to Invest in
1. The brand - one very important factor to consider when choosing the company where to invest your money in terms of stocks. The brand can easily give you an overview of whether it is a company worth investing in.
Choose brands that are popular and those that are already considered as household names. Be it in the tech industry like Google or in retail like Walmart; it is important to choose a brand that has gained so much popularity that the brand is also used as a verb.
2. The Blue Chips - blue chips stocks are those that have a reputation to be profitable during good times or bad. These stocks are those that you should invest in first if you are considering your investment for the long haul.
Although investing in blue chip stocks does not absolutely guarantee the profitability of your investment, it does provide you with a strong portfolio and some sort of assurance on the reliability of the company.
3. The Dividends - another factor to consider is whether or not a company pays dividends. As a rule of thumb, those companies that pay out dividends exhibits the profitability of the company. Aside from knowing that such company is profitable, investing on those that pays dividends also means that you get a return on your investment which might happen quarterly or annually.
4. The Company - you have to know more about the company to which you are going to invest in. The value of the stock also depends on the health of the company. This is why a company with a shaky background and financials would probably not the best choice for you.
5. The business model - choose a company that has a business model that is easy to understand. It could be a company that provides a product, a fast food chain or a service provider. Companies with a complicated business model tend to scare investors away.
These factors are not absolute, and they do not guarantee that your investment will hit a high return. However, these factors could provide you a guide to choosing the right stocks for you to invest in. With the thousands of available stocks in the market, narrowing them down to what can give you profit and more on the gain rather than on losses using these factors will definitely help a lot.