Unless you are running a successful business, chances are high that your salary or your mediocre business could merely fulfill your luxurious fantasy. But deep down your heart, you wish you were crazy rich like some of them you watch on TV. Stock market is the only place where your investment can get double, triple and ten to hundred times in a matter of year if you can invest in the right stock. But stock market can also make you completely broke in your pursuit of becoming rich if you make investment in stocks that get hammered. Here is how to pick stocks to invest for long term.
Investing In Popular Companies – There are thousands and thousands of companies listed on the stock exchange. Some of them are popular some of them are not. If you want to make safe bets, you should invest in large cap stocks. They are generally the ones that are leaders in their field and everyone knows that the company will do well in future. For example, Reliance is a leader, and with JIO and other ventures, they are growing in leaps and bounds. But you cannot expect massive returns in the long term.
Investing In Less Popular Companies – Less popular companies generally fall into the category of midcaps. They can be multi-baggers giving you as much as ten times return in a year. To identify them, you have to first decide a category and then find the midcap stocks in that category. Then you have to check the website of the companies to understand their business and most importantly, check their balance sheet to see the annual growth in sales and profit. Furthermore, check the debt and it should not be too high else the company will spend all its profit in paying the interest. The stocks with low PE and BV, nearly debt-free are the best to invest in.
Investing In Rather Unknown Company – By unknown companies, we mean small caps and penny stocks. Penny stocks are the ones that give as much as 100 times return if you can pick them at the right time. Identifying them is difficult but you have to do your research the same way as above. It is the gambling part in the stock market but those who got rich, they had penny stock in their portfolio.
Before investing, consult a technical analyst who can give you the levels to invest and exit. You can also consult fundamental analyst to discover new companies worth investing which would be the smart decision rather than just researching yourself and investing.