Stock Investing, the Intelligent Investor Way
Here’s a question: which asset class do you invest in? You have probably heard of “don’t work for money, make money work for you” enough times. The thing is, you begin to understand the concept, and you probably reached a point thinking, which asset classes should I start investing in? Well, stock investments may be one of the options. Apart from cryptocurrency, stocks have gained a lot of attention lately, and even interests in investment classes (such as the one you can join through Bijak Labur program in Malaysia) have also grown significantly compared to the past few years.
Can You Actually Make Money From the Stock Market?
Some of us may shiver when we hear about the stock market. Most of it is because of the bad experience people around them had. Before you choose to believe them, think again, is it the stock market, or is it them? Chances are, those friends did not have a solid strategy and the proper knowledge to invest in. But that’s the thing; it’s always better to learn from other people’s mistakes so you don’t unnecessarily lose money “experimenting”!
Safeguarding Your Investment Capital
While it is true that the risk is always there, it does not mean you should stay away from stock investing altogether. In every investment, there is one element that can make or break you. The answer is knowledge. With the right knowledge, you can lower your investment risk. In the stock market, you can approach it safely through value investing.
Ask Yourself: How Much Do You Know About the Company You’re About to Invest?
Before deciding whether or not to invest in a company, think about whether the business model suits you. If you are a shariah investor, is the company shariah compliant? You can use many sources to check, including the Securities Commission website. And then examine also how the company generates revenue. If you understand the company, then you may consider it.
Do the Right People spearhead the Company?
The human factor is key to the longevity and growth of a company. Before making a move, make sure that you take time also to read the profiles of the executives. Excellent management is usually the ones with adequate experience in both the company and the industry. If, for some reason, you don’t trust the management, it’s better to be careful instead by staying away from the company.
When All is Good, Check Your Buying Price
After fulfilling the previous qualitative criteria, you should only consider buying the stock. But before you do, consider your buying price so you do not overpay. The best way has always been to buy the stock when it is on discount or also called being “undervalued“. Buying at the right price helps lower your risk too!
What to Do Next? Buy & Hold!
Unlike traders who focus on making money from intraday trading or swing trades which are stock purchases held for a few days or weeks, real investors hold their position as long as they can. This is important because you will need time for your investment to compound and start growing by itself. It’s about time in the market. But remember, it’s not that you should never sell your stocks. The rule of thumb is: if the company continues to grow, and the business model still makes sense, then you might want to keep it. If they no longer do that, be careful.
How to Get Started?
Do you agree with the methods shared here? If yes, you should take the next step to learn about value investing. We suggest that you consider this Malaysia-based website called Bijak Labur (https://bijaklabur.com/) which has valuable insights about value investing in Shariah-compliant stocks & other types of securities such as ETF, which is essentially similar to socially responsible investing.
Good luck, and remember, always invest in knowledge first so you can do it right!