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What are the Things to know before investing in Stocks?

What are the Things to know before investing in stocks?

 

know before investing in stocks

Benjamin Graham who is known as “the father of value investing” and also the mentor of Warren Buffett recommended several things that a defensive investor must know before investing in any stock, they are discussed below:

  1. Adequate Size of the Company

According to the market capitalization of the companies, stocks are categorized as – the mega cap, large caps, mid caps, small caps, micro caps and the nano caps. Micro cap companies have greater market capitalization than nano caps but less than small, mid, large and mega cap companies. Here what Graham says is that the stocks of the very small size companies should be avoided as they are affected very badly in adverse situations. Continue reading

How does Inflation affect Stock Market?

How does Inflation affect Stock Market?

 

Inflation affect Stock Market

It is not necessary that Inflation affects stocks of every listed company in the stock market. It may affect stocks adversely or favorably depending on their fundamentals. If any company is having poor fundamentals then the stocks of that particular company will definitely suffer and on the contrary, the prices of stocks having rich fundamentals will go up. Continue reading

What is Inflation and how it is calculated?

What is Inflation and how it is calculated?

 

What is Inflation

What is Inflation: Inflation means “a general rise in the prices of goods and services over a time period which results in the loss of currency purchasing power.” It is observed that when the general price level rises due to rise in inflation, we are forced to buy fewer goods and services as we were buying earlier. We can explain them by quoting an example here. If we were buying one liter of Milk for Rs. 10-12 in 1995 then the same Milk we are buying at Rs. 40-45 in 2015. Thus, we can say inflation results in loss of value of money purchasing power. Continue reading

What is Systematic Investment Plan (SIP)?

What is Systematic Investment Plan (SIP)?

 

Systematic Investment Plan

Systematic Investment Plan (SIP) is an investment option where a fixed sum of money is invested in a mutual fund at regular intervals. These intervals could be monthly or quarterly depending on investors’ choice. Before starting SIP, investors should identify the best funds and the amount required to achieve the financial objectives. SIP helps investors save and invest periodically over a longer period and get an attractive return at the end. Many investors try to buy stocks at low price and sell at high price to earn profit. But timing the market is very difficult and very irrational and risky. Continue reading