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Certain Questions Before You Invest in Stocks

HomeCertain Questions Before You Invest in Stocks

f you have decided to invest in the stock market then before making any investment in the stocks of the company, it is necessary to list down some questions and answer them. By answering these questions, you would be able to make better decisions on your selected stock. The purpose of creating some questions is to recall what the company does, and whether it is a good investment or not.

Let’s proceed with the questions:

In which business the company is involved?

Before buying the stocks or shares of the company, explore about the business of the company in which you are going to invest. Find out reasons, why you should make investment in the shares of this company.

Read more: About the Company

There are different concepts in the stock market, which are affected with the business of the company and you must know about them.  It’s better if you have a clear understanding about the functions of NSE, BSE, or SENSEX, as this would make you learn about the different concepts for making good returns from stock market.

Try to grab maximum information about the company and analyze if you are making good decision with your investment.

Where will you arrange the money from?

Your second concern should be related with money management. Ask yourself about how you would arrange for the money for investment. Ideally, for investment, you must use the idle money. Now, what is this idle money? Idle money is the money that you do not need for meeting your day-to-day life & using this amount in stock market would not affect your daily living.

Also, to invest this money, you must make smarter decision. Do not just invest all your money in one pool. Split it & invest, because if you get disappointed from one medium, then you wouldn’t at least face losses from all spheres.

Is the company at growing phase?

One another question you must ask yourself should be related to the growth of the company. The company you’ll be investing in has to be in the growing phase and for this keep a fair record at its revenue. The growing company can add make you generate good returns in the long run.

How much would you have to pay?

Last but not the least, you have to decide whether the money you are investing in particular share is worth it or not. Analyze price of the share, i.e. is it available cheap or is it too expensive. If the price is much higher then you must show patience & wait for buying; but if its price is much lower than your anticipation, then it is the right time for purchasing. Be careful as well as practical in making investments in stock market. Be clear beforehand with your investment plans and decide how much you want to invest.

These questions would definitely get you to a smarter decision and you’ll be able to make good returns with your investment.

About the Author

Rajat Sharma pictureRajat Sharma is a well known stock market analyst and commentator. He has covered Indian markets for over a decade and is regarded for consistently identifying early stage investment opportunities. Attorney by qualification, Rajat has done extensive work for improving corporate governance and disclosure standards.