“No investment means no profit”. Sometimes we only need to invest our time and sometimes both time and money. So careful planning is required while investing. This article will provide you with guidelines that you should consider before choosing any investment opportunities and investment options. These investment ideas and investment tips will help you in having a better return on your investment income.
7 Successful Investment Tips:
- A Simple And Understandable Business An investors’ financial success is co-related to the degree in which they understand their investment. An investor should clearly understand the fundamentals of the business in which he is going to invest. Investor must feel convinced that the business they are buying into will perform well over a period of time.
An investor should be interested in buying into companies that will be successful and profitable for the long term and should care very little for stocks that are “hot” at any given moment. A company with consistent result over a period of time are the best to invest in.
- Favourable Long Term Prospects
An investor should invest in stocks that generate high returns on invested capital. He should invest in companies that will be sustainable over a period of time.
- Allocation Of Company’s Capital
Allocation of company’s capital is the most important management act. A shareholder should know how the company is allocating it’s capital;whether the excess cash is reinvested or it is idle.
- Return On Equity
Customarily,analysts measure annual company performance by looking at earnings per share.But earnings per share mught jsut be a smoke screen. Since most companies retain a portion of their previous year’s earnings to increase their equity base,there is no reason to get excited about record earnings per share.
The test of economic performance is whether a company achieves a high earnings rate on equity capital.
- Turn Off The Stock Market
Remember that the stock market is manic depressive. Sometimes it is wildly excited about future prospects and at other times it is unreasonably depressed. So when you are owning shares in an outstanding business for a number years,what happens in the market on a day-to-day basis is inconsequential.
- Don’t Worry About The Economy
Just as people spend fruitless hours worrying about the stock market so,too,do they worry needlessly about the economy. If you find yourself discussing or debating whether the economy is poised for growth or tilting towards a recession,whether interest rates are moving up or down,or whether there is inflation or deflation.
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