Article written by Sherin Dev; Follow me in Twitter or Facebook . To get latest news and articles Subscribe for free!
“Give people enough guidance to make the decisions you want them to make. Don’t tell them what to do, but encourage them to do what is best” ~Jimmy Johnson
Are you a beginner investor looking for investing step by steps? This is then the right article for you. It goes through each process from the beginning to end to know what involves to invest properly to generate long term wealth. As a beginner to invest, follow the below steps to not miss any points involved to invest:
Prior to start investing, confirm you have visited and read the article ‘Investing Life Cycle to Wealth” and “15 Investment Failure Reasons”
1. Build Your Capital:
Investing is not a process to start in the next moment. If you have ready money in your hand, you have next moment option like bank FD, Fixed Maturity Plans as known as FMP’s, any guaranteed funds or bond etc., but not stock investing. To invest on stocks, use your method to build right capital by adding funds to. Your account little by little. It is a time taking process or not, depends on your capacity to build capital. You can read my practices of accumulating capital little by little but, you can use your own method from mine.
2. Identify Best Trading Account:
Collect details about available trading account and compare the facilities to have better understandings to select right trading account. You can do this selection process along with capital building process, to identify and subscribe a right trading account. Give special attention on charges associated for opening, maintaining and trading activities, facilities providing and customer service clarity.
3. Shortlist Companies:
Once you are comfort with above two points, next will be the shortlisting process. Through scanning available companies, you are shortlisting 10 to 15 companies based on value investing criteria. Visit and read this article to know more about detailed selection process and criteria. Also read Buffett’s advertisement to get maximum knowledge on this section.
4. Analysis of Companies:
In this step, both qualitative and quantitative analysis should be done. Company, product, management quality will be studied along with sales, profit, investor earning and debt position studies. There are various formula set available for doing such analysis but an intelligent investor should develop a set of own analysis process to identify a right company. You can read my personal analysis method right here.
5. Buying Time
In the contest of initial returns while buying, a person can determine right price of a stock to buy. I have posted an article earlier describing initial rate of return calculations as details. Investor should wait for right buying opportunity before triggering any purchase order. Tracking macro economical changes help a person to identify right buying opportunity. Knowing the cutting edge principle of Philip Fisher from this article help you to identify best buying time.
6. Monitoring Investments
Monitoring investments not only give you idea on how the investment maintaining its quality for long term but also, it help an investor to identify selling opportunities. Monitoring involves study on changes of points that previously helped you to buy stocks. A good company always required to maintain its status for long term. Any continuous changes on any analysis points, that previously support you to invest on this stock, is not a good sign and required review.
7. Identifying Selling Time
One of the difficult part for most investors but, if you put little effort, it become one of the easiest part. For example, you still holding some stocks you have purchased for long time back. When purchased, you have done your study properly to know the quality of business and its earning possibilities. After several years, why don’t you conduct analysis of same business to know its present quality? If you do such, you can easily determine whether this stocks need to be avoided or purchase more. If need to be avoided, you can sell the stocks. Here is a detailed article describing selling time identification.
Above is a structured process of investing for beginner investors. Dig a little in this blog for getting some of the best supporting articles I have posted earlier and many of such, coming soon too. As an investor, read the investment success rule and never forget the same.
Do you think any of the above points required more clarification?
Picture: Matter = Energy