Before you Invest in Shares
There are four basic parameters you have to master before you start investing your savings in the Share Market, as it is no doubt risky and in the best possible scenario should be left for the experts. However, if you have decided to invest in shares to make some money working from home you need to remember the four most important factors in shares which are:
- Operating Results of the Company
- Other Income
- Price Movement of Scrip and
- Price/Earning Ratio
I have already discussed the first point in the previous article, operating results of the company, and will take up the next two important factors in this blog and finally come on to the Price/Earning Ratio in the last blog in this series of three blogs.
Other Income
It has to be noted here that Earning Per Share (EPS) offered by the company to the shareholder is a sum total of company’s operating income and other incomes. So, other incomes and their sources should also be looked into since they are cumulatively as well as separately important for analysis of the real performance of the company.
Price Movement of Scrip
Also, price movement of the shares of a particular company has to be studied over a sufficiently long period before investing in shares of the company. This analysis includes studying trend of stock price and it should be ensured that the reason for the rise in Market Price of the Share (MPS) of the particular company is corroborated with the company’s performance and such rise should not be because of the operator or any other factor since a MPS of a company is dependent on Asset Backing of the particular company, as well as profitability, confidence of the investor and other market considerations.
Filed under: Generating Revenue, Business Ideas
