Unfortunately there are still many people who are hesitant to invest in this financial instrument for various reasons, ranging from the high risk faced and confused in choosing the right stock. Recognizing how to invest in stocks that are good and in accordance with the risk profile of each investor can help prepare and get the right financial support to realize your life goals or ideals
Aberdeen, as an institution with more than 30 years of experience investing in the capital market, has filtered and compiled its insights into the world of investing in 10 simple rules coined by Hugh Young, Head of Group equities and also Director at Aberdeen Asset Management PLC.
Equal treatment for shareholders
Fair treatment given by the company to all shareholders is very important. This is the most basic thing in assessing how a company will be fair in the future to all shareholders. Whether it’s for majority or minority shareholders.
Pay attention to people, not assets
In essence, companies do need strong assets, but it must be realized that all these assets will be useless if they do not have quality human resources and management. Therefore, get to know the people who are involved in it.
Pay attention to the company’s financial condition
Financial condition is the backbone of the company. Therefore, identify the company’s assets, total liabilities / debts, cash flow and the company’s investment plan. Financial conditions indicate many things, one of which is the fact that the company is strong and will not fall.
Understand what company you will buy from
Understand the business of the company you are going to buy from. Avoid businesses that don’t make sense and are too complicated. If something looks too good to be true, then you need to be even more careful before buying stock in the company.
Beware of excessive ambition
Many companies are expanding outside their main business. It would be very wise if you are wary of such ambitions, because generally this kind of proportional action will reduce the focus on the main business which ultimately has an impact on the overall financial condition.
Think long term
Consider investing long term to avoid volatility in the stock market. Align your investment term with the company you invest in. It must be understood that in general, stock price movements in the short term will not reflect the actual condition of the company.
Benchmark is only a reference tool
The number of people buying a product doesn’t mean you have to buy the same product. The weight of a company on an index board will only inform you of what has happened in the past. Successful investing requires separate and deep thinking, and you are the one in charge of the decisions.
Take advantage of irrational behavior
Sometimes something happens in the market and investors panic or are otherwise excited with excessive enthusiasm. You have to take advantage of the situation. Being influenced by irrational market behavior is a very dangerous thing. Stay calm and always think long.
Research is the key to your investment success. In the world of investing, making investment decisions without following other investors often results in success. Analyst research is certainly useful, but that doesn’t mean you shouldn’t do the analysis yourself.
Focus on industries that have the potential to have a sustainable competitive advantage
Some industries generate more economic benefits than others. The size of the economic benefits of a sector or industry is often influenced by the level of difficulty in entering the industrial sector. Industries that have a high level of difficulty can provide benefits