Investing in stocks is not as simple as one might think. If your goal is to just spend money and invest them left and right, hoping to hit a jackpot, then yes- that would make it easy. But, calculated and educated moves will provide with the most effective solutions; ones that will provide you with a good profit.
In order not to wander in the world of stocks, there are several things that you should take into consideration. That is what we wanted to discuss in this article. We’ll be taking a look at some of the stuff that you need to know when buying stocks at a certain company. Let’s check them out.
We’ll start this off with Price to Earning ratios or simply known as P/E ratios. They are indicators of the current share price to the per-share earnings. It is calculated by comparing the current market price of the company that you chose with its earnings over the last four quarters. The P/E shouldn’t be too big, but it also should be too small. If it is big, then there must be a reason for that, while if it is small, that may indicate that the company does not have a massive income, but it is growing fast.
Resort To Using Trading Platforms
Thanks to trading platforms, you will have full control of the trading process. The days when you had to deal with annoying brokers are long gone. Trading platforms now allow you to have full control of your finances and invest them wherever you want.
And if that is not enough, you can set your profile and receive notifications for the latest market developments, which will make you extremely flexible. South Africa is one of the countries where trading platforms have been used quite a lot recently. Of course, each trading platform has its strengths, so you need to research and find one that suits your individual needs.
If your goal is to save money, then you can take a look at the cheapest share trading platform South Africa. The article has quite a lot of useful information and it will help you make the best decision and start investing with ease.
Dividends are the perfect choice for those that are looking for stable investments and don’t have the time to watch the market that frequently. They are sort of like an interest rate at a saving’s account. Regardless of the current stock price of the company, you will receive frequent payments. In most cases, they are issued in cash, but some companies resort to paying them in shares. Additionally, these payments are most commonly received quarterly and are very important as they provide you with a steady income.
ROA and ROE
ROA, or also known as Return on Assets, is an indicator that will let you know how smartly the company uses its assets and creates value for the owners. The more efficient they are in generating revenue, the better.
Some companies even use debts in addition to the assets and debts are very important and need to be taken into consideration. This is where ROE, or Return on Equity, comes in. ROE tells you how wisely the company uses its capital, debt included. When comparing ROE, make sure that the company’s ROE is not higher than the rest in the sector as there may be unusual factors that boost it.
Finally, we are going to close this off with a very important note. The investment market is highly volatile, meaning that it fluctuates every day. You may win on some occasions, but you are also facing the risk of losing. That is why it is important to have an emergency fund for the darkest days.