{"id":3916,"date":"2020-03-15T20:29:35","date_gmt":"2020-03-15T14:59:35","guid":{"rendered":"http:\/\/capitalante.com\/?p=3916"},"modified":"2020-12-21T21:55:54","modified_gmt":"2020-12-21T16:25:54","slug":"how-to-invest-in-the-stock-market","status":"publish","type":"post","link":"https:\/\/capitalante.com\/how-to-invest-in-the-stock-market\/","title":{"rendered":"How to Invest in the Stock Market"},"content":{"rendered":"<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Many people get in confusion where and how to invest their hard earned money. There are many options of the large basket like gold, debt securities, bonds, equity etc. <\/span><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Before investment in the stock market, you should consider your purpose, risk appetite, and time horizon.<\/span><\/p>\r\n<p><img loading=\"lazy\" class=\"aligncenter wp-image-8367\" title=\"How to Invest in the Stock Market\" src=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/dcofkld-330a6b88-d148-4a33-a942-a456a727c83a-e1608479247769.jpg\" alt=\"How to Invest in the Stock Market\" width=\"900\" height=\"469\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/dcofkld-330a6b88-d148-4a33-a942-a456a727c83a-e1608479247769.jpg 518w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/dcofkld-330a6b88-d148-4a33-a942-a456a727c83a-e1608479247769-300x156.jpg 300w\" sizes=\"(max-width: 900px) 100vw, 900px\" \/><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">The stock market will yield better returns over a long-term horizon. So, you should continue your investment for at least 10 years to get fruitful returns. In this column, we will share some valuable tips for beginners who wish to invest in the stock market i.e. how to invest in the stock market. These tips or information may be beneficial for you to achieve your financial goals in the near future.<\/span><\/p>\r\n<h2 style=\"text-align: center;\"><span style=\"color: #0000ff;\"><strong><span style=\"font-family: georgia, palatino, serif; font-size: 14pt;\">How to Invest in the Stock Market<\/span><\/strong><\/span><\/h2>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">One individual investor can start Investment in the stock market via either direct equity by opening of a demat account or mutual funds.<\/span> <span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">But putting your money physically in the stock market by any means is the fourth step of investment. Getting confused?<\/span> <span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Let\u2019s make it clear with the following picture.<\/span><\/p>\r\n<p><a href=\"http:\/\/capitalante.com\/wp-content\/uploads\/2018\/11\/6109-06684997en_Masterfile.jpg\" target=\"_blank\" rel=\"noopener noreferrer\"><img loading=\"lazy\" class=\"aligncenter wp-image-3945 size-full\" title=\"How to Invest in the Stock Market\" src=\"https:\/\/capitalante.com\/wp-content\/uploads\/2018\/11\/6109-06684997en_Masterfile.jpg\" alt=\"How to Invest in the Stock Market - the steps before start investment\" width=\"450\" height=\"308\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2018\/11\/6109-06684997en_Masterfile.jpg 450w, https:\/\/capitalante.com\/wp-content\/uploads\/2018\/11\/6109-06684997en_Masterfile-300x205.jpg 300w\" sizes=\"(max-width: 450px) 100vw, 450px\" \/><\/a><\/p>\r\n<h3 style=\"text-align: center;\"><strong><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\">First Step<\/span><\/strong><\/h3>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">The first rule of investment is to ensure sufficient fund for any kind of emergency or unforeseen situation. Every person should save a satisfactory amount per month from his income. Then he can move to any kind of investment plan or scheme. <\/span><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">This saving amount may vary from person to person according to his status or requirements. So, create an emergency fund. Try to accumulate enough money in this fund so that you can bear your all expenses i.e., foods, clothes, insurance bills, and other necessary things of any kind of at least 6 months.<\/span><\/p>\r\n<p><img loading=\"lazy\" class=\"aligncenter wp-image-8368 size-full\" title=\"How to Invest in the Stock Market\" src=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Rule-550x275-1-e1608480021619.png\" alt=\"How to Invest in the Stock Market\" width=\"452\" height=\"221\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Rule-550x275-1-e1608480021619.png 452w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Rule-550x275-1-e1608480021619-300x147.png 300w\" sizes=\"(max-width: 452px) 100vw, 452px\" \/><\/p>\r\n<ul>\r\n<li><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Read also:<span style=\"color: #ff0000;\"> <a style=\"color: #ff0000;\" href=\"https:\/\/economictimes.indiatimes.com\/slideshows\/investments-markets\/10-golden-rules-of-investing-in-stock-markets\/slideshow\/18570969.cms\" target=\"_blank\" rel=\"noopener noreferrer\">10 golden rules of investing in stock markets &#8211; The Economic Times<\/a><\/span><\/span><\/li>\r\n<li><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Read also:<span style=\"color: #ff0000;\">\u00a0<a style=\"color: #ff0000;\" href=\"https:\/\/www.nerdwallet.com\/blog\/investing\/how-to-invest-in-stocks\/\" target=\"_blank\" rel=\"noopener noreferrer\">How to Invest in Stocks: A Step-by-Step for Beginners &#8211; NerdWallet<\/a><\/span><\/span><\/li>\r\n<\/ul>\r\n<h3><strong><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\">Second Step<\/span><\/strong><\/h3>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">The second act is to take an insurance policy to secure your family in case of your uncertain demise. The most important thing is you should buy a term insurance plan at an early age. Whenever you start earning you should take a term plan. The earlier you take a term plan, the lesser the premium will be for the term plan.<\/span><\/p>\r\n<p><a href=\"http:\/\/capitalante.com\/wp-content\/uploads\/2019\/03\/Term-Insurance-plan.png\" target=\"_blank\" rel=\"noopener noreferrer\"><img loading=\"lazy\" class=\"aligncenter wp-image-5952 size-full\" title=\"How to Invest in the Stock Market\" src=\"https:\/\/capitalante.com\/wp-content\/uploads\/2019\/03\/Term-Insurance-plan.png\" alt=\"term insurance premium\" width=\"945\" height=\"756\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2019\/03\/Term-Insurance-plan.png 945w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/03\/Term-Insurance-plan-300x240.png 300w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/03\/Term-Insurance-plan-768x614.png 768w\" sizes=\"(max-width: 945px) 100vw, 945px\" \/><\/a><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Suppose, you buy a term plan at the age of 25 and you want to continue this plan till the age of 60 years. So, the duration of the term plan is 35 years. You can easily avail up to Rs. 1 crore as your life insurance for just Rs. 7100\/- yearly. But if you delay for 5 years, you need to pay a yearly premium of Rs. 8300\/-. Again if you buy a term insurance plan at the age of 35 years then you need to pay Rs. 10,200\/- per year for an assured sum of Rs. 1 Crore for the upcoming 25 years.<\/span><\/p>\r\n<h3><strong><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\">Third Step<\/span><\/strong><\/h3>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">The third thing you need to do is to buy a health insurance policy. Health insurance\u00a0or Medi-claim Policy is an insurance\u00a0that covers any kind of health hazards or the risk of the\u00a0health of a person wholly or partially. It bears the medical expenses of a person that is incurred. You can opt for a health insurance for any kind of uncertain or accidental health problems.<\/span><\/p>\r\n<p><img loading=\"lazy\" class=\"aligncenter wp-image-8370\" title=\"How to Invest in the Stock Market\" src=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/health-in-surance-e1608480497626.jpg\" alt=\"How to Invest in the Stock Market\" width=\"900\" height=\"386\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/health-in-surance-e1608480497626.jpg 814w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/health-in-surance-e1608480497626-300x129.jpg 300w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/health-in-surance-e1608480497626-768x329.jpg 768w\" sizes=\"(max-width: 900px) 100vw, 900px\" \/><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">To get the health insurance you need to select a lump sum amount and on the basis of it, you are to pay a premium either monthly or quarterly or yearly basis. <\/span> <span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">The insurance covers the medical expenses when you suffer from any health hazards and it helps to carry out the investment without worry. In other words, the health insurance policy will ensure fund on physical ailments of you as well as your family. This medical insurance policy diminishes the heavy medical bills.<\/span> <span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">After doing the above-said things you are free to invest in the stock market.<\/span><\/p>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\"><strong>Finally, Start Investment<\/strong><\/span><\/h3>\r\n<p class=\"has-text-color has-black-color\"><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">In order to make an investment in the stock market, the beginners have two options. The first option is to invest via direct equity by opening a Demat account and the second one is via a mutual fund. In order to make a profit in the stock market via direct equity, you need to analyze the fundamentals, business analysis, balance sheet, profit and loss account, free cash flow while choosing the stock in which you are going to invest.<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\"><!-- \/wp:paragraph -->\r\n\r\n<!-- wp:heading {\"level\":6} --><\/span><\/p>\r\n<p><img loading=\"lazy\" class=\"alignnone wp-image-8377 size-large\" title=\"How to Invest in the Stock Market\" src=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Blue-and-White-Step-by-Step-Process-Chart-Presentation-1-1024x487.png\" alt=\"How to Invest in the Stock Market\" width=\"1024\" height=\"487\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Blue-and-White-Step-by-Step-Process-Chart-Presentation-1-1024x487.png 1024w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Blue-and-White-Step-by-Step-Process-Chart-Presentation-1-300x143.png 300w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Blue-and-White-Step-by-Step-Process-Chart-Presentation-1-768x365.png 768w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Blue-and-White-Step-by-Step-Process-Chart-Presentation-1-1536x730.png 1536w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Blue-and-White-Step-by-Step-Process-Chart-Presentation-1.png 1903w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\"><!-- \/wp:heading -->\r\n\r\n<!-- wp:paragraph {\"textColor\":\"black\"} --><\/span><\/p>\r\n<p class=\"has-text-color has-black-color\"><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">But in the case of mutual fund investment, you need not analyze the above-mentioned points. Mutual funds are managed by fund managers who are active in this field for a long time and possess vast knowledge and experience. The fund managers pick stocks or shares in which your money is to be invested. <\/span><\/p>\r\n<p class=\"has-text-color has-black-color\"><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">The fund manager of the respective mutual fund invests your money in different sectors like Banking, Finance, FMCG, Infrastructure, Automobiles, Information Technology, and Manufacturing, etc. You may invest a lump sum amount at once or you may opt for a monthly, quarterly or yearly basis via SIP.<\/span><\/p>\r\n<h4><img loading=\"lazy\" class=\"aligncenter wp-image-8371\" title=\"How to Invest in the Stock Market\" src=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/direct-equity-vs-mf-e1608483455798-300x246.jpg\" alt=\"How to Invest in the Stock Market\" width=\"359\" height=\"294\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/direct-equity-vs-mf-e1608483455798-300x246.jpg 300w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/direct-equity-vs-mf-e1608483455798.jpg 350w\" sizes=\"(max-width: 359px) 100vw, 359px\" \/><\/h4>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\"><!-- \/wp:paragraph -->\r\n\r\n<!-- wp:paragraph {\"textColor\":\"black\"} --><\/span><\/p>\r\n<p class=\"has-text-color has-black-color\"><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">If you are confused about which route you should follow to start investing in the stock market, i.e. direct equity or mutual fund you may read the article <span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"http:\/\/capitalante.com\/investing-in-equity-mutual-funds-versus-investing-in-stocks\/\" target=\"_blank\" rel=\"noreferrer noopener\">How you can invest, directly in equity or via mutual funds.<\/a><\/span><\/span><\/p>\r\n<ul>\r\n<li><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Read also:<span style=\"color: #ff0000;\"> <a style=\"color: #ff0000;\" title=\"Top 10 best sectors to invest in India for long term\" href=\"http:\/\/capitalante.com\/best-sectors-to-invest-in-india-for-long-term\/\" target=\"_blank\" rel=\"bookmark noopener noreferrer\">best sectors to invest in India for long term<\/a><\/span><\/span><\/li>\r\n<li><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Read also:<span style=\"color: #ff0000;\"> <a style=\"color: #ff0000;\" title=\"Top 10 Best stocks to buy in India for long term\" href=\"http:\/\/capitalante.com\/best-stocks-to-buy-in-india-for-long-term\/\" target=\"_blank\" rel=\"bookmark noopener noreferrer\">Best stocks to buy in India for long term<\/a><\/span><\/span><\/li>\r\n<\/ul>\r\n<h6><strong><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\">Documents required to open a Demat account or a mutual fund folio in order to invest in the stock market<\/span><\/strong><\/h6>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">To open a mutual fund account or a Demat account you need the following documents: a Savings bank Account, a cancelled Cheque of the same account, Identity Proof like a PAN Card, Address Proof like Aadhar Card, Voter ID Card, etc., Two Passport Photograph.<\/span><\/p>\r\n<h6><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\"><strong>Choose the right Stockbroker<\/strong><\/span><\/h6>\r\n<p><img loading=\"lazy\" class=\"alignnone wp-image-8379 size-full\" title=\"Choose the right Stockbroker\" src=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-5.jpg\" alt=\"Choose the right Stockbroker\" width=\"955\" height=\"464\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-5.jpg 955w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-5-300x146.jpg 300w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-5-768x373.jpg 768w\" sizes=\"(max-width: 955px) 100vw, 955px\" \/><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\"><!-- \/wp:heading -->\r\n\r\n<!-- wp:paragraph {\"textColor\":\"black\"} --><\/span><\/p>\r\n<p class=\"has-text-color has-black-color\"><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Before you choose a broker, you should know that there are two types of brokers namely Full-service brokers and Discount brokers.<\/span><\/p>\r\n<h6><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\"><strong>Full-Service Broker<\/strong><\/span><\/h6>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\"><!-- \/wp:heading -->\r\n\r\n<!-- wp:paragraph {\"textColor\":\"black\"} --><\/span><\/p>\r\n<p class=\"has-text-color has-black-color\"><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">A full-service broker offers services like giving you a savings bank account, a Demat account, a trading account, a detailed analysis of stocks, investment advice etc. The savings account, Demat account, and trading account are commonly named as a 3-in-1 account. A full-service broker gives the stock recommendation, trading calls, and future &amp; option strategy.<\/span><\/p>\r\n<h6><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\"><strong>Discount Broker<\/strong><\/span><\/h6>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\"><!-- \/wp:heading -->\r\n\r\n<!-- wp:paragraph {\"textColor\":\"black\"} --><\/span><\/p>\r\n<p class=\"has-text-color has-black-color\"><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">A discount broker is a type of broker who gives you only Demat cum trading account from where you can make trades i.e., buying and selling of stocks or intraday trading. Unlike a full-service broker, a discount broker does not provide any research analysis or investment advice. If you want trading tips and advice you need to pay separately for that. Again a discount broker has a low brokerage charge in comparison to a full-service broker.<\/span><\/p>\r\n<p><a href=\"https:\/\/www.5paisa.com\/open-demat-account\/?referralcode=56263159\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" class=\"aligncenter size-full wp-image-7718\" src=\"http:\/\/capitalante.com\/wp-content\/uploads\/2018\/05\/Open-a-Free-Demat-Account.png\" alt=\"Open a demat account\" width=\"728\" height=\"90\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2018\/05\/Open-a-Free-Demat-Account.png 728w, https:\/\/capitalante.com\/wp-content\/uploads\/2018\/05\/Open-a-Free-Demat-Account-300x37.png 300w\" sizes=\"(max-width: 728px) 100vw, 728px\" \/><\/a><\/p>\r\n<ul>\r\n<li><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Read also: <span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"http:\/\/capitalante.com\/how-to-choose-a-stockbroker-in-india\/\" target=\"_blank\" rel=\"noopener noreferrer\">How to Choose a Stockbroker in India Right Now<\/a><\/span><\/span><\/li>\r\n<\/ul>\r\n<h6><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\"><strong>Diversification of your portfolio<\/strong><\/span><\/h6>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Mutual funds are managed by fund managers who are in the market for a long time and have vast knowledge and experience. The fund managers pick stocks or share across various sectors and industries in which your money is to be invested. If you give the fund Rs. 100\/- then the mutual fund invests your money in different sectors like banking, FMCG, Infrastructure, Automobiles, IT Sector etc. You may invest lump sum amount at once or you may opt for monthly, quarterly or yearly basis via SIP.<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">On the other hand in the case of investment via direct equity you need to choose and invest accordingly in those stocks or sectors whose business model is clear to you i.e., how the company earns money, whether it will exists after 20-30 years, what are the risk factors for the company etc. The next thing is to you need to invest your money into at least 10 sectors and 2 stocks of each sector. <\/span><\/p>\r\n<blockquote><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">If you are confused how to diversify your portfolio, you may read the article\u00a0<\/span><span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"http:\/\/capitalante.com\/how-to-diversify-stock-portfolio\/\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"font-family: georgia, palatino, serif; font-size: 14pt;\">How to Diversify Stock Portfolio<\/span><\/a>.<\/span><\/blockquote>\r\n<h2 style=\"text-align: center;\"><span style=\"color: #0000ff;\"><strong><span style=\"font-family: georgia, palatino, serif; font-size: 14pt;\">How to Pick Best Stocks for Consistent Returns<\/span><\/strong><\/span><\/h2>\r\n<p><img loading=\"lazy\" class=\"How to Pick Best Stocks for Consistent Returns aligncenter wp-image-8378 size-full\" title=\"How to Pick Best Stocks for Consistent Returns\" src=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-3.jpg\" alt=\"How to Pick Best Stocks for Consistent Returns\" width=\"864\" height=\"434\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-3.jpg 864w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-3-300x151.jpg 300w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-3-768x386.jpg 768w\" sizes=\"(max-width: 864px) 100vw, 864px\" \/><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">After choosing the sectors where you invest, you need to pick the best stocks for consistent returns. In order to pick the best stock, you should check out the following parameters of a company before investing in it.<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\"><span style=\"color: #0000ff;\">Parameter #1. Revenue \u2013<\/span> Revenue or net sales of a company should be constant for at least 5 years. You may check that the company has been generating sales growth annually during the last 5 financial years of at least 10%.<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\"><span style=\"color: #0000ff;\">Parameter #2. Net Profit \u2013<\/span> The net profit of a company increases at least 15% on a year-on-year basis.<\/span><\/p>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\">Parameter #3. Healthy dividend payout and stable Earnings-per-share<\/span><\/h3>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Let\u2019s assume, a company has a net income of $ 10,000 per year. It Pays $5,000 in a preferred dividend to investors. It has 50 shares outstanding.<\/span><\/p>\r\n<p><a href=\"http:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Earning-Per-Share-1.png\" target=\"_blank\" rel=\"noopener noreferrer\"><img loading=\"lazy\" class=\"aligncenter wp-image-6115 size-full\" title=\"Healthy dividend payout and stable Earnings-per-share\" src=\"https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Earning-Per-Share-1.png\" alt=\"Healthy dividend payout and stable Earnings-per-share\" width=\"1500\" height=\"500\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Earning-Per-Share-1.png 1500w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Earning-Per-Share-1-300x100.png 300w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Earning-Per-Share-1-768x256.png 768w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Earning-Per-Share-1-1024x341.png 1024w\" sizes=\"(max-width: 1500px) 100vw, 1500px\" \/><\/a><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">It is a good idea to invest your money in those stocks that regularly pay a dividend and deliver a Healthy dividend payout. The stocks which have delivered healthy dividend-paying must have following features<\/span><\/p>\r\n<ul>\r\n<li><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Consistent dividend payout over the past 5 years.<\/span><\/li>\r\n<li><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">High dividend yield for the last 5 years.<\/span><\/li>\r\n<li><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Growth in dividend per share from time to time.<\/span><\/li>\r\n<\/ul>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\"><span style=\"color: #0000ff;\">Parameter #4. Price to Earnings Ratio (P\/E)<\/span><\/span><\/h3>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">P\/E ratio should be low as compared to the other peer companies active in the same industry.<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Let\u2019s assume, a company has a net income of $10000 per year. It Pays $5000 in preferred dividend to investors. It has 50 shares outstanding.<\/span><\/p>\r\n<p><a href=\"http:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Earning-Per-Share-1.png\"><img loading=\"lazy\" class=\"aligncenter size-full wp-image-6115\" src=\"http:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Earning-Per-Share-1.png\" alt=\"Earning Per Share\" width=\"1500\" height=\"500\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Earning-Per-Share-1.png 1500w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Earning-Per-Share-1-300x100.png 300w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Earning-Per-Share-1-768x256.png 768w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Earning-Per-Share-1-1024x341.png 1024w\" sizes=\"(max-width: 1500px) 100vw, 1500px\" \/><\/a><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Now, if the stock currently trades at $1000, then<\/span><\/p>\r\n<p><a href=\"http:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/P_E-ratio.png\" target=\"_blank\" rel=\"noopener noreferrer\"><img loading=\"lazy\" class=\"aligncenter wp-image-6116 size-full\" src=\"http:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/P_E-ratio.png\" alt=\"Price to earning Ratio\" width=\"1500\" height=\"500\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/P_E-ratio.png 1500w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/P_E-ratio-300x100.png 300w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/P_E-ratio-768x256.png 768w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/P_E-ratio-1024x341.png 1024w\" sizes=\"(max-width: 1500px) 100vw, 1500px\" \/><\/a><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">You need to choose such stocks that have P\/E less than 9. But P\/E varies from sector to sector. Lower P\/E ratio of sectors does not mean that this sector is undervalued and is going to boom and deliver a multi-bagger return in the near future compared to that sector which has a higher P\/E ratio.<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\"> These sectors have higher valuation just because the market is bullish on these sectors and their future potential like Automobile, FMCG, Petroleum, etc. They are the core sectors of the Indian economy and have the potential to deliver a robust performance in the upcoming years.<\/span><\/p>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\"><span style=\"color: #0000ff;\">Parameter #5. Price to Book Ratio (P\/B)<\/span><\/span><\/h3>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">P\/B should be low as compared to peer companies operating in the same industry.<\/span><\/p>\r\n<p><a href=\"http:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Price-to-Book-Ratio-i.e.-P_B-Ratio.png\" target=\"_blank\" rel=\"noopener noreferrer\"><img loading=\"lazy\" class=\"aligncenter wp-image-6117 size-full\" src=\"http:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Price-to-Book-Ratio-i.e.-P_B-Ratio.png\" alt=\"Price-to-Book Ratio\" width=\"1200\" height=\"300\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Price-to-Book-Ratio-i.e.-P_B-Ratio.png 1200w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Price-to-Book-Ratio-i.e.-P_B-Ratio-300x75.png 300w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Price-to-Book-Ratio-i.e.-P_B-Ratio-768x192.png 768w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Price-to-Book-Ratio-i.e.-P_B-Ratio-1024x256.png 1024w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><\/a><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Let\u2019s assume, the stock currently trades at $ 100 and the book value per share is $ 10 then,<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">P\/B Ratio =\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 [$100\/$ 10] = 10.<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">You need to pick such stocks that have a P\/B ratio of less than one.<\/span><\/p>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\">Parameter #6. Current Ratio<\/span><\/h3>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">The ratio is the snapshot of the asset and liabilities of any company. You will find the assets and liabilities a company has in its balance sheet. Find such quality stocks that have a current ratio of more than 1.5.<\/span><\/p>\r\n<p><a href=\"http:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Current-Ratio.png\" target=\"_blank\" rel=\"noopener noreferrer\"><img loading=\"lazy\" class=\"aligncenter wp-image-6118 size-full\" src=\"http:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Current-Ratio.png\" alt=\"Current Ratio\" width=\"1200\" height=\"300\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Current-Ratio.png 1200w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Current-Ratio-300x75.png 300w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Current-Ratio-768x192.png 768w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Current-Ratio-1024x256.png 1024w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><\/a><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Let\u2019s assume, the current assets of any company is $ 1200 and current liabilities is $ 400 then,<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Current Ratio =\u00a0 [$1200\/$ 400] = 3.<\/span><\/p>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\"><span style=\"color: #0000ff;\">Parameter #7. Debt to Equity Ratio<\/span><\/span><\/h3>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">This is the comparison between a company\u2019s own capital and the debt which the company borrows from a bank or a financial institution.<\/span><\/p>\r\n<p><a href=\"http:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Debt-to-Equity-Ratio.png\" target=\"_blank\" rel=\"noopener noreferrer\"><img loading=\"lazy\" class=\"aligncenter wp-image-6119 size-full\" src=\"http:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Debt-to-Equity-Ratio.png\" alt=\"Debt to Equity Ratio\" width=\"1500\" height=\"500\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Debt-to-Equity-Ratio.png 1500w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Debt-to-Equity-Ratio-300x100.png 300w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Debt-to-Equity-Ratio-768x256.png 768w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Debt-to-Equity-Ratio-1024x341.png 1024w\" sizes=\"(max-width: 1500px) 100vw, 1500px\" \/><\/a><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Suppose a company has a capital of Rs. 100\/- and it has borrowed Rs. 100 from a bank.<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">So the debt ratio of the company is 100:100 = 1 <\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">A debt-free company is desirable. If not so the ration must be low to 0.10 or 0.25.<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">If the company has marginal or low debt or it is a debt-free company, the company is worth investing. Let us illustrate what is the difference between a high debt company and a debt-free company. When a company has huge debt from the market or bank or any other commercial institutions, then the company concentrates on the debt and its effort goes to pay the debt. <\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">It cannot be sincere about the service, quality of the product or any other important aspects needed in the business. On the other hand, if the company is debt-free, the company can concentrate on product quality, service and customer satisfaction only. That is why a debt-free company is better than a high debt company.<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\"><span style=\"color: #0000ff;\">Parameter #8. Return on Equity (ROE) \u2013<\/span> should be greater than 20%<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\"><span style=\"color: #0000ff;\">Parameter #9. Dividend Yield \u2013<\/span> You can ensure about good dividend yield by the company.<\/span><\/p>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\"><span style=\"color: #0000ff;\">Parameter #10. Beta<\/span><\/span><\/h3>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">A beta is a measurement of the volatility of a share in respect of the market. When Beta is less than 1, it means that the share is theoretically less volatile than the market. It means the common individual may invest his money for the long term. Again, if Beta is more than 1 means that the share is theoretically more volatile than the market. For example, if a stock\u2019s beta is 1.2, it means the stock is 20% more volatile than the market. So, a lesser beta means people are investing in that specific stock with a long-term perspective.<\/span><\/p>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\">Parameter #11. The cash\u00a0flow of the company<\/span><\/h3>\r\n<p><img loading=\"lazy\" class=\"The cash\u00a0flow of the company alignnone wp-image-8380 size-full\" title=\"The cash\u00a0flow of the company\" src=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-6-1.jpg\" alt=\"The cash\u00a0flow of the company\" width=\"960\" height=\"443\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-6-1.jpg 960w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-6-1-300x138.jpg 300w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-6-1-768x354.jpg 768w\" sizes=\"(max-width: 960px) 100vw, 960px\" \/><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">To understand a company\u2019s true economic condition one should check the free cash flow of the respective company. Free cash flow actually reveals the profit the company makes. It implies a broader range in the company\u2019s functioning in overall business.<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Whenever you check the free cash flow of a company, you should analyze from which source the company is gaining its capital for its day-to-day business. Usually, there are two sources, the first one is earning from running operation i.e., business and the second one is receiving debt from the market i.e., debt financing. If the company runs its operation from the profit earned by running operation you should stay invested with the company. But if the company runs its business by debt financing, naturally the debt will increase from time to time. So, stay clear of these types of companies or stocks.<\/span><\/p>\r\n<p><a href=\"http:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Free-Cash-Flow.png\" target=\"_blank\" rel=\"noopener noreferrer\"><img loading=\"lazy\" class=\"aligncenter wp-image-6004 size-full\" src=\"https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Free-Cash-Flow.png\" alt=\"How to Invest in the Stock Market by Free cash Flow\" width=\"800\" height=\"2000\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Free-Cash-Flow.png 800w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Free-Cash-Flow-120x300.png 120w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Free-Cash-Flow-768x1920.png 768w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/04\/Free-Cash-Flow-410x1024.png 410w\" sizes=\"(max-width: 800px) 100vw, 800px\" \/><\/a><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Free Cash flow is one of the most reliable and widely used metrics among value investors, as it provides an accurate position of the company\u2019s financial condition. In simple words, free cash flow is an account of how much cash a company is left with after paying for all expenses.<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Companies that manage to generate consistently large cash flows without incurring much capital expenditure are always valued higher by investors. Negative free cash flows are a sign of the deteriorating health of a company.<\/span><\/p>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\">Parameter #12. Current Inflation<\/span><\/h3>\r\n<p><img loading=\"lazy\" class=\"alignnone wp-image-8389 size-full\" title=\"Current Inflation\" src=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-12-4.jpg\" alt=\"Current Inflation\" width=\"960\" height=\"412\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-12-4.jpg 960w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-12-4-300x129.jpg 300w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-12-4-768x330.jpg 768w\" sizes=\"(max-width: 960px) 100vw, 960px\" \/><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">In countries like India, you should watch out inflation because the P\/E ratio is adversely affected by current inflation. Owing to inflation, retail consumers spend less and the expenses rise. This will decrease the Earning per share. When EPS falls, it, in turn, increases the P\/E ratio making stocks overvalued. In addition, for a growing economy like India too low inflation rate also adversely affects the stocks. So, as an intelligent investor, you should analyze the following points,<\/span><\/p>\r\n<ul>\r\n<li><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Reserves growth must be more than the current inflation rate.<\/span><\/li>\r\n<li><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Asset growth must be more than the current inflation rate.<\/span><\/li>\r\n<li><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Sales growth must be more than the current inflation rate.<\/span><\/li>\r\n<li><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Cash flow growth must be more than the current inflation rate.<\/span><\/li>\r\n<\/ul>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\">Parameter #13. Enterprise Value<\/span><\/h3>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">You need to analyze whether the enterprise value of any stock is less than its market capitalization. Usually when the stock\u2019s enterprise value is less than the market capitalization, then it is considered that the stock is undervalued.<\/span><\/p>\r\n<p><a href=\"http:\/\/capitalante.com\/wp-content\/uploads\/2019\/01\/What-is-Nifty-and-Sensex-1.png\" target=\"_blank\" rel=\"noopener noreferrer\"><img loading=\"lazy\" class=\"aligncenter wp-image-5673 size-full\" src=\"https:\/\/capitalante.com\/wp-content\/uploads\/2019\/01\/What-is-Nifty-and-Sensex-1.png\" alt=\"How to Invest in the Stock Market - calculation of Market capitalization\" width=\"800\" height=\"2000\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2019\/01\/What-is-Nifty-and-Sensex-1.png 800w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/01\/What-is-Nifty-and-Sensex-1-120x300.png 120w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/01\/What-is-Nifty-and-Sensex-1-768x1920.png 768w, https:\/\/capitalante.com\/wp-content\/uploads\/2019\/01\/What-is-Nifty-and-Sensex-1-410x1024.png 410w\" sizes=\"(max-width: 800px) 100vw, 800px\" \/><\/a><\/p>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\">Parameter #14. Investment Rating<\/span><\/h3>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">There are many rating agencies which are in operation like Crisil, Morgan-Stanley, and Standard &amp; Poor, etc. You have to follow the rating given by these rating agencies. Generally, B+ rating is an ideal investment grade in which you are free to invest your hard-earned money. The rating B+ indicates that the company is stable and likely to grow in the near future.<\/span><\/p>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\">Parameter #15. Business Model<\/span><\/h3>\r\n<p><img loading=\"lazy\" class=\"aligncenter wp-image-8388 size-full\" title=\"Business Model\" src=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-11-2.jpg\" alt=\"Business Model\" width=\"960\" height=\"394\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-11-2.jpg 960w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-11-2-300x123.jpg 300w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-11-2-768x315.jpg 768w\" sizes=\"(max-width: 960px) 100vw, 960px\" \/><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Ace investor Warren Buffet once suggested that an individual investor should invest in such companies or stocks whose business model or modus operandi is clear like a day to the investors. It is very important to understand what the business of the company is like. In other words, what the company sells or what services it offers and how the company makes profit from its operations are to be considered.<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Investors should also see whether the demand of the product the company sells will remain constant or move upward in future. For example, food products, steel, electronic tools are inevitable for everyday life. So, the demand of these things will remain constant or increase in the future. The companies operating in these sectors will make profit.<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Again, how a company operates its business influences its profit margin. It is also a part of the business model of a company to distribute the profit among its share holders. How a company produces its products, how it sells them, how the packaging of the products are attractive, the company\u2019s marketing policies all these things form a business model.<\/span><\/p>\r\n<h4><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\">In addition to<\/span><\/h4>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">The source of capital or fund to run or expand the business is also very crucial. An under debt company cannot afford to distribute the dividends among its shares holders, because a lion share of the profit goes to repay the debt. On the other hand, a company which is a zero debt company can yield better dividend and better return in the future. So, the above-mentioned points are treated as the business model of a company.\u00a0 By reviewing the business model you can get a clear idea whether the business model is unrealistic or there is any chance that the business will succeed.<\/span><\/p>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\">Parameter #16. Management of the company<\/span><\/h3>\r\n<p><img loading=\"lazy\" class=\"alignnone wp-image-8384\" title=\"Management of the company\" src=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-3-2-300x169.jpg\" alt=\"Management of the company\" width=\"900\" height=\"506\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-3-2-300x169.jpg 300w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-3-2-768x432.jpg 768w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-3-2.jpg 960w\" sizes=\"(max-width: 900px) 100vw, 900px\" \/><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Management is the backbone of the company. A quality management will raise a company to the pick. It is a proven fact that good management in competitive industry will yield better returns than the worst management in monopoly market. In order to access the strength of management, you need to consider the following aspects.<\/span><\/p>\r\n<ul>\r\n<li><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">The persons who manage the company\u2019s business and the persons in key positions i.e., CEO, CFO, COO &amp; CIO.<\/span><\/li>\r\n<li><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">You need to examine the educational and employment backgrounds and previous employment records of the personnel. Suppose, the CEO previously worked in coal sector and then he has shifted to technology. There are minimum chances that he will succeed. Ask yourself whether he is able to deliver success to the company.<\/span><\/li>\r\n<li><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">You should analyse the management\u2019s style how the team manages the business, whether they promote the business as an open, transparent and flexible way.<\/span><\/li>\r\n<\/ul>\r\n<ul>\r\n<li><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">You need to analyse when the management has taken charge. Suppose, the management has remained unchanged during the past 10 years. Then this long tenure of the management is a good indication. It means the management is quite successful and has delivered the desired financial results such as compounded sales growth, compounded profit growth, a good return on equity. If you see a company is changing a management team frequently then you need to invest your money to somewhere else.<\/span><\/li>\r\n<li><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Again, if you watch only restructuring of business or management then you need to analyse carefully. The restructuring is not always bad. There are several businesses which have turned around. You need to watch out the new management team\u2019s members, their past achievements. When company hires management it chooses wisely who can do well for the company\u2019s current financials.<\/span><\/li>\r\n<\/ul>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\">Parameter #17. Competitive advantage<\/span><\/h3>\r\n<p><img loading=\"lazy\" class=\"aligncenter wp-image-8390 size-full\" title=\"Competitive advantage\" src=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-13-3.jpg\" alt=\"Competitive advantage\" width=\"592\" height=\"405\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-13-3.jpg 592w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-13-3-300x205.jpg 300w\" sizes=\"(max-width: 592px) 100vw, 592px\" \/><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">A competitive advantage allows a company to produce quality service and better price for its customers. Then this competitive advantage accelerates the company\u2019s sales margin which increases profit margin than its competitors i.e., pear companies. While you invest your money in any company you should choose such a company that has sustainable competitive advantage in respect of cost structure, brand reorganization, corporate reorganization, product quality distribution network and superior customary support.\u00a0 The brand value or name of any company is in the billions of money. A portfolio of brand influences the sales and growth of the company in many ways. It is a competitive advantage than its peer companies.<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Let\u2019s understand this with an example. Whenever we talk or think about adhesive the first name comes to our mind is Fevicol, Fevistick, Fevikwik, m-seal, Dr. Fixit etc. All these are brands of Pidilite industries. The products of Pidilite Industries possess a superior quality. The company maintains vast distribution network and superior customer service to establish this company as a market leader in the adhesive Sector or Industry.<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Whenever we talk or think about Trolly or casual Bags the first name comes to our mind is Aristocrat, Skybags etc. All these are brands of VIP industries. So, you need to consider these factors before making investment in a company.<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">After selecting the company you need to analyse the industry or sectors in which the specific company is in operation i.e., the growth potential of the industry. A mediocre company in a growth industry can generate better return on equity than a good company in a dying industry. You have to watch out which industry is growing and likely to deliver better Return on equity.<\/span><\/p>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\">Parameter #18. Whether the industry or company creates an entry barrier<\/span><\/h3>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Suppose, you want to open a restaurant then you can easily open a restaurant as it does not require the best skill level and large capital. But if you want to set up a company in adhesive industry or automobile industry or pharmaceutical industry you will face a great entry barrier created by these industries. These industries however have created massive barrier to make entry like large capital expenditure, exclusive distribution network, government regulations, patents, brands reorganizations and still counting. The harder the entry barrier is better the advantage for the existing companies are.<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">The bottom line is that you should analyse the news coming to you from various sources. Because of JIO, internet connection has become easily available. JIO has increased the use of Smartphone. So the sale of Smartphone, as well as the number of internet users, have rapidly increased and till counting. This has increased the demand of optical fiber as optical fiber is required to spread the internet connection to every nook and corner of the country. So, companies operating in this field are direct beneficiaries and by investing in this sector you will get better returns. As a fundamental analyst you need to analyse both the fundamental as well as the qualitative analysis of stocks so that you can choose your desired investment opportunity. The qualitative analysis of stocks will help you to choose the best company among the companies operating in any industry and yield better returns.<\/span><\/p>\r\n<h4><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\">Let\u2019s understand this with an example.<\/span><\/h4>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Whenever we talk or think about adhesive the first name comes to our mind is Fevicol, Fevistick, Fevikwik, m-seal, Dr. Fixit, etc. All these are brands of Pidilite industries. The products of Pidilite Industries possess superior quality. The company maintains a vast distribution network and superior customer service to establish itself as a market leader in the adhesive Sector or Industry.<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Whenever we talk or think about Trolly or casual Bags the first name comes to our mind is Aristocrat, Skybags, etc. All these are brands of VIP industries. So, you need to consider these factors before making an investment in a company.<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">After selecting the company, you need to analyze the industry or sectors in which the specific company is in operation i.e., the growth potential of the industry. A mediocre company in a growth industry can generate a better return on equity than a good company in a dying industry. You have to watch out which industry is growing and likely to deliver a better return on equity.<\/span><\/p>\r\n<h3><span style=\"color: #0000ff;\"><span style=\"font-family: georgia, palatino, serif; font-size: 14pt;\">Parameter #19. <\/span><span style=\"font-family: georgia, palatino, serif; font-size: 14pt;\">Ownership Structure<\/span><\/span><\/h3>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">You need to check out the promoters\u2019 stake, mutual fund holdings, Foreign Institutional investors i.e., FIIs stake, etc. As you are investing in their business, you need to know the goodwill, management intelligence, etc.<\/span><\/p>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\">Parameter #20. <\/span><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\">Future plans<\/span><\/h3>\r\n<p><img loading=\"lazy\" class=\"aligncenter wp-image-8385 size-full\" title=\"Future plans\" src=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-8-2.jpg\" alt=\"Future plans\" width=\"960\" height=\"432\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-8-2.jpg 960w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-8-2-300x135.jpg 300w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-8-2-768x346.jpg 768w\" sizes=\"(max-width: 960px) 100vw, 960px\" \/><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">The most crucial part is to check out the future plans i.e., the expansion of business, marketing policy, etc. Suppose, Titan Company is quite famous for making ornaments, jewelry, wristwatches, etc. So, you need to keep a close eye whether Titan Company enters in a new segment or makes an expansion of business which will increase its market share.<\/span><\/p>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\"><strong>Which investment style fits you<\/strong><\/span><\/h3>\r\n<p><img loading=\"lazy\" class=\"aligncenter wp-image-8381 size-full\" title=\"Which investment style fits you\" src=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-2-1.jpg\" alt=\"Which investment style fits you\" width=\"960\" height=\"540\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-2-1.jpg 960w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-2-1-300x169.jpg 300w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-2-1-768x432.jpg 768w\" sizes=\"(max-width: 960px) 100vw, 960px\" \/><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">There are two types of investor namely Defensive Investor and Enterprising Investor. <strong>A Defensive investor<\/strong> always disburses his investments in various sectors like automobile, oil marketing companies, food products, jewellery, garments etc. By doing this he lessens the risk of loss. If one sector underperforms, there are the shares of other sectors that may compensate for the loss. <\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">This type of investors invests in stocks of large companies which are pioneers in their field in terms of market share and have delivered steady returns during last 10-15 years with regular dividend payments, earnings stability, strong financial condition, earnings growth etc.<\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">On the other hand,<strong> Enterprising Investor<\/strong> forecasts and anticipates the future of consumer demand. Let&#8217;s take the examples,<\/span> <span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Nowadays govt. of India emphasizes the use of an electric vehicle. In electric vehicles, engine or auto ancillary equipment is made of high-quality plastics instead of iron. So the demand for plastics in the near future will\u00a0increase. Enterprising investors will predict this situation and invest accordingly. You may read <span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"http:\/\/capitalante.com\/which-stocks-will-benefit-from-electric-vehicles-in-india\/\" target=\"_blank\" rel=\"noopener noreferrer\"><strong><u>which stocks will be benefitted from the electric vehicles in India.<\/u><\/strong><\/a><\/span><\/span><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Very recently Govt. of India has launched Bharat Mala Project to make or develop better infrastructure throughout the country. So, in near future as well as far future, the direct beneficiaries for this project will be cement companies, steel companies, tar companies, infra companies etc. The companies in these sectors will get benefited and this will improve their earnings in the upcoming quarterly and yearly results.<\/span><\/p>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\"><strong>Why you should invest in the stock market for a long-term horizon<\/strong><\/span><\/h3>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Power of compounding enables an investor to earn interest on interest. Let\u2019s make it clear with an example. Suppose, you invested Rs. 1, 20,000\/- at once in the stock market 5 years ago and the market has given 15% CAGR during this 5 years.<\/span> <span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Just look at the following graph.<\/span><\/p>\r\n<p><a href=\"http:\/\/capitalante.com\/wp-content\/uploads\/2018\/11\/1.png\" target=\"_blank\" rel=\"noopener noreferrer\"><img loading=\"lazy\" class=\"aligncenter wp-image-3807 size-full\" src=\"http:\/\/capitalante.com\/wp-content\/uploads\/2018\/11\/1.png\" alt=\"How to Invest in the Stock Market - return of investment\" width=\"740\" height=\"399\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2018\/11\/1.png 740w, https:\/\/capitalante.com\/wp-content\/uploads\/2018\/11\/1-300x162.png 300w\" sizes=\"(max-width: 740px) 100vw, 740px\" \/><\/a><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">If you make a lump sum investment of Rs. 1 lakh at once and allow the money to compound at the rate of 15%, then you will get-<\/span><\/p>\r\n<ul>\r\n<li><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">4 lakh after 10 years,<\/span><\/li>\r\n<li><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">16 lakh after 20 years,<\/span><\/li>\r\n<li><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">66 lakh after 30 years.<\/span><\/li>\r\n<\/ul>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">In order to avoid loss in the stock market, you need to consider the following points,<\/span><\/p>\r\n<h3><strong><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\">Point #1. Never make an investment with borrowed money<\/span><\/strong><\/h3>\r\n<p><img loading=\"lazy\" class=\"aligncenter wp-image-8383\" title=\"Never make an investment with borrowed money\" src=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Retirement-Happy-Email-Header-3-1.png\" alt=\"Never make an investment with borrowed money\" width=\"900\" height=\"300\" \/><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">First of all, if you apply for a loan you will have to repay it within a scheduled time. Now when the market corrects, many good quality stocks correct up to 30%-40% from their all-time highest peak at which you bought the specific stocks. There is no certainty when the market will head again. As you will have to repay your borrowed money within the specified time and you don\u2019t know when the market will go up, so you will be in big trouble. That is why it is suggested that you should never make an investment with borrowed money.<\/span><\/p>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\"><strong>Point #2. Never invest in accordance with tips<\/strong><\/span><\/h3>\r\n<p><img loading=\"lazy\" class=\"aligncenter wp-image-8382\" title=\"Never invest in accordance with tips\" src=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Retirement-Happy-Email-Header-2.png\" alt=\"Never invest in accordance with tips\" width=\"900\" height=\"300\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Retirement-Happy-Email-Header-2.png 600w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Retirement-Happy-Email-Header-2-300x100.png 300w\" sizes=\"(max-width: 900px) 100vw, 900px\" \/><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Very often, as an investor, you may receive various phone calls, messages or e-mails from different unknown sources. There you will find information regarding investment. This information is meant to misguide you and sent by insiders of any company who has a personal purpose to fulfill. They actually conduct illegal insider trading exploiting your interest. In an illegal insider trading, an insider of a company along with a small group of people buys a particular stock and share price-sensitive information. So, huge artificial demand is created for the particular stock resulting in higher prices.<\/span> <span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Then, at a certain point when the prices hit the \u2018satisfactory\u2019 level, the insider exits the company along with his small group of people. In other words, this insider sells stocks and makes profits. Soon the stocks plummet resulting in huge losses for the retail investors.<\/span><\/p>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\"><strong>Point #3. Maintain Investment Discipline<\/strong><\/span><\/h3>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">At the beginning don\u2019t invest all the money you have. Though you don\u2019t need the money at the moment. Try to invest regularly in little amounts. It is suggested for the beginners or the persons who don\u2019t have much knowledge about the share market to invest via equity sip or mutual fund sip on regular basis month by month. It reduces the possibility of losing your money. Your patience in monitoring your portfolio increases the chances of generating great returns in future.<\/span><\/p>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\"><strong>Point #4. Have patience and control your nerves<\/strong><\/span><\/h3>\r\n<p><img loading=\"lazy\" class=\"aligncenter wp-image-8386 size-full\" title=\"Have patience and control your nerves\" src=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-9-2.jpg\" alt=\"Have patience and control your nerves\" width=\"960\" height=\"454\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-9-2.jpg 960w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-9-2-300x142.jpg 300w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-9-2-768x363.jpg 768w\" sizes=\"(max-width: 960px) 100vw, 960px\" \/><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">First of all, you should not invest your money in one stock. You should diversify the stock portfolio. Share prices of all companies will not fall together. When the share price of a company is increasing rapidly do not get tempted and buy more shares of that company, because in volatile market price may come down. Again at the sudden fall of share price do not worry. Generally, investors panic and lose their nerves. You should invest regularly in those stocks which are decreasing checking the fundamentals.<\/span><\/p>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\"><strong>Point #5. Don\u2019t ignore your long-term goal<\/strong><\/span><\/h3>\r\n<p><img loading=\"lazy\" class=\"aligncenter wp-image-8387 size-full\" title=\"Don\u2019t ignore your long-term goal\" src=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-10-2.jpg\" alt=\"Don\u2019t ignore your long-term goal\" width=\"960\" height=\"486\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-10-2.jpg 960w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-10-2-300x152.jpg 300w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Memphis-Stop-Start-Continue-Brainstorm-Presentation-10-2-768x389.jpg 768w\" sizes=\"(max-width: 960px) 100vw, 960px\" \/><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Many persons stop investing as the market is volatile. If you invest in stocks either direct equity or via mutual fund you need not stop your SIP just because the market is declining. You need not worry about your long-term goals which are 10 years away for a certain period of the volatility of 6 months or one year. So being nervous, if you sell your share or mutual fund in a declining market definitely you will make a loss. So invest the money which you don\u2019t need for the upcoming 10 to 15 years. It will yield wonderful returns after 15 to 20 years.<\/span><\/p>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\"><strong>Point #6. Start with a little amount and don\u2019t forget to increase whenever possible<\/strong><\/span><\/h3>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">To get the benefit of compound interest you may start with a little amount of Rs. 1000\/-. You may then increase the amount of SIP every year with a little extension of 5%. Let\u2019s understand it with the following graph.<\/span><\/p>\r\n<p><a href=\"http:\/\/capitalante.com\/wp-content\/uploads\/2018\/11\/3.png\" target=\"_blank\" rel=\"noopener noreferrer\"><img loading=\"lazy\" class=\"aligncenter wp-image-3809 size-full\" src=\"http:\/\/capitalante.com\/wp-content\/uploads\/2018\/11\/3.png\" alt=\"How to Invest in the Stock Market - step up sip\" width=\"748\" height=\"416\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2018\/11\/3.png 748w, https:\/\/capitalante.com\/wp-content\/uploads\/2018\/11\/3-300x167.png 300w\" sizes=\"(max-width: 748px) 100vw, 748px\" \/><\/a><\/p>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">As shown in the graph if you have made a SIP of Rs. 5000\/- per month for the upcoming 35 years, then you will get Rs. 5.7 crore. If you increase the SIP amount by 5% every year then you will get Rs. 8.2 crore after 35 years. So, step up your SIP amount as possible.<\/span> <span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">So, the bottom line is before you make an investment, please make sure that you don\u2019t invest your savings in the stock market. You should start investing in the stock market in accordance with your risk appetite and time horizon because the equity asset class has delivered better returns than any other asset class in the long run.<\/span><\/p>\r\n<h3><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\"><strong>How Capitalante can help you<\/strong><\/span><\/h3>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Are you confused about how to prepare an effective financial plan to achieve financial freedom? If yes, learn<span style=\"color: #ff0000;\">\u00a0<a style=\"color: #ff0000;\" href=\"http:\/\/capitalante.com\/financial-planning-services\/\" target=\"_blank\" rel=\"noopener noreferrer\">how to prepare effective financial planning<\/a>.<\/span><\/span><\/p>\r\n<p><a href=\"https:\/\/www.instamojo.com\/@capitalante\" target=\"_blank\" rel=\"noopener noreferrer\"><img loading=\"lazy\" class=\"aligncenter wp-image-6837 size-full\" src=\"http:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Financial-Planning-eBook.png\" alt=\"Financial Planning eBook\" width=\"728\" height=\"90\" srcset=\"https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Financial-Planning-eBook.png 728w, https:\/\/capitalante.com\/wp-content\/uploads\/2020\/03\/Financial-Planning-eBook-300x37.png 300w\" sizes=\"(max-width: 728px) 100vw, 728px\" \/><\/a><\/p>\r\n<ul>\r\n<li><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Read also:<span style=\"color: #ff0000;\">\u00a0<\/span><\/span><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"http:\/\/capitalante.com\/why-people-lose-money-in-stock-market\/\" target=\"_blank\" rel=\"noopener noreferrer\">Why People Lose Money in Stock Market<\/a><\/span><\/li>\r\n<li><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #000000;\">Read also: <span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"http:\/\/capitalante.com\/how-to-buy-stocks-in-india\/\" target=\"_blank\" rel=\"noopener noreferrer\">How to buy stocks in India for Beginners<\/a><\/span><\/span><\/li>\r\n<\/ul>\r\n<p><span style=\"font-family: georgia, palatino, serif; font-size: 14pt; color: #0000ff;\">If you have any questions regarding how to invest in the stock market for beginners in India feel free to comment so that we can have a discussion. If you found this post helpful don&#8217;t forget to share with your loved ones.<\/span><\/p>","protected":false},"excerpt":{"rendered":"<p>Many people get in confusion where and how to invest their hard earned money. There are many options of the large basket like gold, debt securities, bonds, equity etc. Before investment in the stock market, you should consider your purpose, &#8230; <\/p>\n<p class=\"read-more-container\"><a title=\"How to Invest in the Stock Market\" class=\"read-more button\" href=\"https:\/\/capitalante.com\/how-to-invest-in-the-stock-market\/#more-3916\">Continue Reading<span class=\"screen-reader-text\">How to Invest in the Stock Market<\/span><\/a><\/p>\n","protected":false},"author":6,"featured_media":4020,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[16],"tags":[514,515],"_links":{"self":[{"href":"https:\/\/capitalante.com\/wp-json\/wp\/v2\/posts\/3916"}],"collection":[{"href":"https:\/\/capitalante.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/capitalante.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/capitalante.com\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/capitalante.com\/wp-json\/wp\/v2\/comments?post=3916"}],"version-history":[{"count":0,"href":"https:\/\/capitalante.com\/wp-json\/wp\/v2\/posts\/3916\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/capitalante.com\/wp-json\/wp\/v2\/media\/4020"}],"wp:attachment":[{"href":"https:\/\/capitalante.com\/wp-json\/wp\/v2\/media?parent=3916"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/capitalante.com\/wp-json\/wp\/v2\/categories?post=3916"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/capitalante.com\/wp-json\/wp\/v2\/tags?post=3916"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}