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Investing in shares does yield rich dividends but one has to take care of certain key factors before making a foray in this area.
• Scrutinize the financial pages of your dailies; learn to recognize a stable company. Make a thorough study before making a splash. A “good’ company can be determined by its products. The less ‘fashionable’ its products, the better its prospects in the share market. e.g. Companies that produce cement or aluminum may have a higher growth potential than a makeup company.
• A sense of timing is very important. It is almost impossible to pick shares at the bottom of the price swing and at their peak. Moreover, every peak is followed by a crash in the stock market. So, a healthy dose of common sense is a substitute for your experience and will guide you when to buy, sell or simply hold on to what you have – that’s a reliable way to ensure a good, steady profit.
• The stock market is open to the forces of supply and demand; nevertheless the government ensures a form of security for the investor. Be sure to read the Annual Report issued to every shareholder of a company. This lets you know the company’s progress, how and where your money is being used, and at what profit or loss. The company must also report to the shareholder on anything that may influence the price, such as a takeover, etc.
During a down period, what you can do is hold on to your stock – if you’ve chosen well, your shares should regain their value in time. |
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