Many of our clients are young individuals who would be considered fairly educated investors. But education on the stock market or bond market is simply not enough to ensure that your current and future investments give you the return you are looking for. Not only do you need to be constantly aware of what is going on in the markets, but you also need to be aware of the investment time you should be investing over each life span. When gambling in a risky market such as the stock market, individuals who invest for themselves need to know the basic analytics needed to succeed. It’s also crucial to know how you should balance your accounts and how to manage them properly.
When analyzing stocks for purchase, there are about a million different factors to consider, and each stock analyst will go on to say their personal opinion on which statistics are best to consider before buying. The truth is that in the end, the stock market is just legal gambling that is truly unpredictable. Yes, there are ways to possibly see what the future of companies will look like when examining some stocks, but if you don’t spend most of the day educating yourself in the markets, you probably won’t have an idea of what the future holds for most companies.
Several key elements to analyze when creating a stock portfolio are Beta, dividends paid, and company earnings. Beta gives you an idea of how a particular stock will be affected by changes in the economy and the stock market as a whole. A proper stock portfolio created for success should have stocks with a wide range of beta. This can ensure the protection of your account if a new stock market crash ever occurs. It can also provide you with protection as the stock market gradually moves forward at a solid speed. Dividends are definitely something to consider when buying stocks. Either companies can choose to pay a dividend to their shareholders or they can throw that money back into the operation to try to improve their business.
Many people like dividends when buying stocks in the short term. We all know that stocks are designed as a long-term investment, but many people are still trying to profit from them in the short term. Personally, I do not invest in many companies that pay large dividends to their shareholders, because I would rather use that money to grow their business and the highest possible share price. Don’t get me wrong, money is always better than money later, but when I try to optimize long-term investment, I’d rather be patient and watch the company’s success go through the roof in a few years than earn an extra five dollars per share each year.