How to choose a Good Stock to Invest
To invest in good stocks in the stock market,you can use these 7 methods given below-
- Screening and filtering of good shares using the company’s financials.
- Before investing in any company, get complete information about it.
- Look for competitive advantage (Moat) in companies.
- Make sure the company has low-debt.
- Look for financial ratios like RoE and RoCE.
- The company should be Transparent and Honest.
- Find out the true value of the stocks.
Before investing in the stock market, if you do not have a demat account, then first of all go to any broker platform and open your demat account first, only then you can invest in the stock market.
In your initial time, you have to focus on learning the most because the more and more you learn in the stock market, the more money you will be able to earn from the stock market.
How can you invest in good stocks in the stock market?
No matter who is the biggest investor of the world, he creates his wealth by investing money in the stock market in two ways:
- First : Through Value Investing
- Second : By trading.
These are the only two ways by which people make money in the stock market.
But what is the difference between these two?
Before knowing the difference between these two, you should know about both trading and value investing.
Therefore, first of all let’s see some important points about trading, after that we will also discuss about value investing;
Some important things about trading:
- In trading you focus on short time to earn profit, then if market goes bullish in same short time then you profit and if market goes Bearish then you lose.
- In trading, people buy stocks at a lower price and sell them at a higher price within a short period of time and earn profit.
- In trading, people enter the market within a much shorter time frame and exit very quickly.
- In trading, people hold stocks for a few minutes, a few hours or as much as 1 day.
- To trade, a lot of people resort to ‘Technical Analysis’ in which they look at many indicators like: moving average, volatility etc.
- Due to the high volatility in the prices of stocks, trading is considered risky by most of the people, so if you invest without any strategy then you can also suffer a lot of loss.
- There are many people in trading who lose 10 times or more money than what they earn on the first day and then leave the trading and spoil the name of the stock market among the people.
- When you hold stocks for a long time, you will see the power of compounding in your wealth.
- The biggest advantage of value investing is that you get exponential growth in it.
- Many people resort to ‘Fundamental analysis’ to do value investing. In this you do not focus on daily price fluctuations but you have to analyze the financials, management and even that sector of the company.
- People in trading recently earn 10% to 20% profit but this does not create their wealth, so to create wealth you need to do “Value Investing”
