Investors must determine the investment to be chosen according to their analysis. Likewise, stock investors must determine the shares of their choice. This is because there are very many types and numbers of shares. Therefore investors need to go through the steps in stock investment to make their investment decisions. The steps in stock investment are important so that investors get higher certainty, are not speculative, and are not wrong in making decisions.
We have discussed that investment includes several things, including, capital funds in the present, assets or portfolios, risk management, and profit expectations. Investment can bring benefits to individuals and to companies in carrying out their business.
Steps in Stock Investment.
An investor must determine what stocks will be chosen, besides that it must also determine how much investment will be made. Here, investors need steps in stock investment. To take an investment decision, the following steps are needed for stock investment steps.
Determining Investment Objectives.
Investors need to determine the investment objectives, time period, and value of the investment will be made. Investors need to do this because they have to manage risks and the benefits they get. Often, investors face huge losses to generate large profits. Because there is a positive relationship between risk and investment benefits, High Risk High Gain. Investors must measure their resistance to the risk of losses that can befall them.
Securities / Stock Analysis
Investors must analyze stocks before buying them. You can detect stocks that are worth buying using technical and fundamental analysis. Technical analysis is stock analysis using charts. Investors assess the signals that appear on the chart. While the fundamental is an analysis of shares in terms of company finance. You can use one or both of these analyzers.
Generally, market participants have different assumptions about stock prices. They consider stock prices mispriced or fair share prices. Investors can react by valuing stocks through analytical tools. Investors will try to find cheap mispriced stocks to gain gains from rising stock prices.
Capitals ownerconsider stock prices reasonable because they think the capital market is an efficient market. Investors conduct fundamental analysis to identify the prospects of companies in the future. The prospect of a good company will produce stock values that grow and vice versa. Therefore investors always analyze the factors that influence the growth of the company.
The portfolio is a collection of investments bought by investors. Investors after analyzing various stocks, the result is a stock portfolio. The stock portfolio involves identifying the various stocks to be purchased. And the portfolio concerns the proportion of funds to be invested in each of these shares.
The stock portfolio evaluation phase is the final stage of the steps in stock investment. At this stage, investors evaluate portfolio performance. Investors assess the level of profits obtained and the risks that can be borne. At this stage, investors can make changes to their portfolio. Investors must analyze again the shares owned. In addition, investors need to look for new stocks that have a better potential gain.