Investing in stocks requires research and analysis, something that many wannabe investors don’t do.
Many people invest in stocks and dream of great returns. But often they do not realise that in order to gain, you first have to master the art of investing.Go into it with a positive mindset. It is a common assumption that investing in stocks is risky. In truth, it is not so much a gamble as an act to build wealth through the accumulation of shares in good-quality businesses.
Read up on successful investors like Warren Buffett, Robert T Kiyosaki and Jim Rogers to increase your knowledge and change your perception.It is good to learn how to interpret financial statements, which are basically report cards on the fundamental qualities of a company. Analyse annual reports, compile financial data, and compare them with their stock price movements over an extended period like 10 years. It is a lot of work, but it will give you insights and knowledge to make more informed decisions on which stocks to invest in.Develop a set of criteria for your ideal stocks, including fundamental qualities and valuation ratios. Build a database of stocks that fulfill your criteria and consider investing in them if the prices are attractive.
You might make some gains or incur losses; these will allow you to revisit and adjust your criteria. Replace the stocks that incur losses with those that have better fundamental qualities.With the skills and experience you have gained, you will be ready to scale up your portfolio. Perhaps you will have more income and capital by this stage to invest in stocks that are fundamentally solid, with attractive valuations but at higher prices.