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December 24, 2013
Finance

Tips for Stock Market Beginners

Playing the stock market can be a great path to creating and accumulating wealth. However, all of us know that it is a double-edged sword as there is an equal chance of your losing your hard-earned money. There are certain strategies that you can use to get better returns on your investments and to avoid the bad ones. Here are some tips to get you started:

Start first by looking at the list of dividend aristocrats. Here you will see the list of companies with stocks that have consistently increased dividends over the last twenty five years.


The next step is to shortlist those companies from the list above whose stocks have seen continuous rise in their revenues. 


Another sign of a healthy company is the steady growth of free cash flow which means that you can take the risk of buying its stock.


Check for the balance sheet of the company and look out for certain cues which indicate positive signs like their assets being more than their liabilities, presence of zero preferred stocks and the debt to equity ratio being less than one.


Do some thorough research on a site like Yahoo Finance about other key stats of the company like the price to sales ratio, the earnings per share, PEG value and so on.


Keep track of the quarterly and annual reports of the company as they provide detailed information on how the company has performed and also an indication of the company's performance in future.


Be patient. When you own stock, the key is to wait for the proper signal before you make any changes.


Take advice from the stock experts about when to sell your stock which will help you earn more profit, but make sure you select your stock advisors carefully.

Before taking the plunge, you should probably try your luck on an online simulator first. This will give you an indication of how good you are at investing in stocks. 

 

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