March 29, 2018 / BY Humaira Adil
5 Rules You Should Follow to Pick the Right Stocks
The biggest challenge for an investor can be picking the right stocks. Investing in stocks indeed is a risky business and requires a lot of experience. But obviously, one has to start from somewhere and learn by the passage of time. But besides being risky and confusing, the stock exchange is quite beneficial and an attractive option for an instant financial profit. In fact, some of the richest people in Pakistan
have such a status symbol because they invest in different stocks very wisely.
Although profit potential depends on one’s skill and wisdom yet there are some basic rules to follow while picking up the stocks to invest.
Invest in what you know
This is the most basic rule for investing in stocks! Always invest in what you know. Investing in the stocks of any industry about which you have no insight is a straight suicide. So, if you have expertise in a specific field, go for it. You will not only be confident about your decision but will also have an upper hand when it comes to dealing.
Invest in Brands
This is another important thing to follow in the beginning. On earlier stages, you should play safe by investing in well-known brands which are more likely to make profits. And even if you want to take a risk, take the safer one. Invest in stocks from the emerging companies with a strong impression and credibility. Overall, it is best to stick with in-demand and highly-admired brands as well as underweight sectors where these stocks are hard to find or do not exist.
Invest in what is Stable
Stability is always the key to earn profit from any kind of investment. In fact, most of the investment companies in Karachi
prefer to invest in the brands which have earned stability for a long passage of time. Of course, stability does not mean no ups and downs (which is impossible) but the overall outcome average must reflect stability to the maximum extent. While investing, you must ask yourself that will the company, brand or management in which you want to invest benefit the shareholders?
Invest in Dividend Stocks
In order to earn well by investing in stock and shares
, you should focus on the companies that pay out dividends. Although exceptions can be made for the companies with a strong branding image such as Google (which doesn’t provide dividends) but make sure most of the companies in your portfolio are the ones who offer dividend stocks.
Buy Stocks When Breaking Out from Large Basing Area
This is the golden rule which many successful investors follow. You can find and follow this pattern with emerging brand stocks and try to buy the more established companies as cheap as possible to hold onto for the long run.
So these are the five rules to invest in the stocks which you should follow in order to keep yourself safe from a big financial loss.