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Article by Sherin Dev; Follow me in Twitter or Facebook
This is certainly not an article for you once if you are an experienced investor. If so, better move to number of useful articles in this blog and read that. This is for stock investment infants and not even for stock investment kids. This article is totally based on the bottom fishing approach that is suitable for those who are a big zero in investment knowledge. This article arranged with some steps for them to follow and get success with minimal knowledge in direct stock or stock market investment. Have a look and comment your points below the article.
Money Hacker never advices anyone to invest in stocks directly, unless the person is excellent in direct stock investments. However, number of people asked questions that they required managing their money than give to the hand of any person to whom they never want to trust. Such people also don’t have any previous investment experiences or have not involved direct stock market before. They are however ready to invest money for long term and willing to take all risks. Whenever receiving such requests, it was difficult for me to answer. However, I have found the below steps for them to invest directly to stock with minimal knowledge and control money lose to the minimum or none.As told earlier, this is a bottom fishing approach with selected highly reputed companies that have good reputation all over the nation and among people. This investment approach means the investment would happen only when the stock market comes down to the bottom level along with the prices of selected stocks. If market dips to the bottom level, but stock prices of selected companies are intact, this idea will not work properly. One should identify various historical down level of stock markets along with company stock price changes at each market cycles. This would help him to understand how well the company prices when various market high times and how low the prices would fall when the market is down. This is the critical success point in this idea.
1. At the very first, open an online or offline trading account with a reputed stock broker in your area, who able to provide you best services and have minimal service charges. One can easily identify a good trading account by collecting service provider information and scan the service charges. Depend on the time and personal availability, open an online or offline account. If you are not interested to trade online, an offline account would fit you better. Those who are internet savvy, an online account would be their best option.
2. Determine and accumulate the amount you have plan to invest. Deposit the amount to the bank account that connected to your trading account. If you have sufficient money in your hand, but found the time is not great to invest and also you want to get some interest on your amount, put that money to a good liquid fund. Liquid funds are best with capital guarantee as well as liquidity. You can recollect your money within 3 working days. If that not works for you then accumulate the money in your bank account, connected to the trading account. This would however fetch you only minimal interest that savings bank account provides.
3. Identify your investment candidates. This is the vital step to follow and practice if you are not an experienced investor. Identification of companies highly connected to the common sense. Identify and list some of the best companies in your nation that have monopolistic position in the market with their product or service. Such companies should be well reputed, preferably large cap companies. Ask self a question why do you select this company and what all are the products belongs to them have monopolistic position in the market and who all consuming their products. Remember, any product or service that is monopoly in the market and highly focused to the middle class people and family would be your best candidates.
4. Identify their price levels. Take a note of happened historical price changes for last two or three markets dips and compare the present price with that. This would help one to identify where the prices goes to the maximum down and up. If the present price is high, wait until the prices of preferred stock to reach down to your expected level. Monitor the company prices regularly until it meet your goal.
5. Once the prices of intended stocks reaches to the expected level, start buying. Buy it maximum. Investment of two or three large companies with fantastic reputations would be best than buying a single company.
6. Once bought, hold the stock in trading account. Monitor to identify the price level to reach maximum heights. This may sometime take years. As long as you wait, your money also grows with the reputation of the company. Once the prices reaches to the high level as expected, sell and book your profits. Continue this process for maximum possible years.
Remember, this idea based on common sense and everybody may not able to achieve success. It depends on how well you understood this idea and how well you select the right companies and when buy and sell taking place. It also required the investor wait for years to buy or sell stocks. Remember, this is not a technical or value investment approach but, simple idea that worked with utmost patience.Another important factor is, never test this idea with small and micro cap stocks. It would work with companies that have utmost reputation in the nation and trust from people with their solid, admired products or services.
What do you now think about this? Would you like to try it out?