The Stock Market Can Mold Us Into Financial Decisions Makers

What Should We Do Before Investing?

There are many advantages to investing, and most people who have a financial advisor say it is possible to make the stock market work in your favor. What most intelligent and careful investors agree on is to accumulate enough knowledge to make a sound financial decision. The more an investment decision is based on emotion or trying to explore a jackpot stock, like playing the lottery, the more it could be a mistake.

If the business is healthy and its revenue stream is healthy, it will show it in its quarterly earnings. To arrive at the knowledge of whether a company is healthy or not requires taking time to study the stock symbol you are interested in investing. Today it is recommended to use a financial website to perform your research before investing. Take, for example, ABCD (this is just an example). Find out how the stock has played in the past 5-10 years in its sector. What innovations has it made in the years of its IPO? Obtain a copy of its yearly report to investors and study the figures.

Spend Time in Analysis

Who performed the audit for the company? What was the company’s profit for the last quarter? What were the gains in the previous eight to nine quarters? At this point, you will start to get a mental picture of the performance of the stock over a long period. Beware of new companies less than five years old since they are very volatile. Talk to a professional money manager about the stock. Ninety-nine percent of money managers will tell you the same thing, which is the decision is up to the investor. Money managers won’t interfere in your financial choices since there is too much at stake.

Professional Money Managers

Banyan Publishing and others offer paid services to investors. Each of them publishes credible reports by very successful money managers. Successful money managers are often called “gurus” and have a long history of success. Companies put billions of dollars in their hands to invest for them. Professional money managers will make sure you never get close to the biggest stock losers. Their job is to point you towards big profits. Find out about who these people are and what they have done. Look at your stock and find out who manages the inventory you want to invest.

In other words, if you’re going to play in the stockmarket be smart about it and get a 360-degree view of the company before throwing down some of your savings on a stock. After all your research, give yourself a few days to think about what you want to do. Spend some more time looking at the advantages and disadvantages of your investment.

Why Investing is Good

Here are some solid reasons for investing in the stock market. First, you get to see your money work for you. You money could be sitting safely in a CD drawing three to five percent per year, or you can take the same money and have it make a reasonable return of ten percent per year. Before you invest, make sure you understand your level of risk. Your risk level is recognized as the amount of money you are willing to lose within a certain amount of time. If you do lose your investment, you will still be able to carry on with your life. That is a health risk. On the other hand, if you do make some money, how far do you want to keep your investment in the stock. Most professional investors feel comfortable selling their stock after they have gained their return on investment (ROI).

Disadvantages of Investing

The most significant disadvantage of investing in the stock market is to lose everything invested. Being careful that what you invest won’t get lost but yields a reasonable return is what you should try to make happen. While it is easy to expect high returns on your investment, it is better to be reasonable and look at all the possibilities.

What If?

Ask yourself several what-if questions about your stock investment before you make a final investment. If you are married, ask your spouse and get feedback. Do everything to discourage yourself from investing. After so many ways of discouraging yourself from investing, then you know that maybe your investment is still a possibility. Even though you don’t see the outcome of the investment, you are serious about considering investing. All you need to do now is decide when to invest. At each step, gather more information about your investment until the moment you make a final decision—which only you can make.

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