At the beginning, every investor has the first question in mind: what will be his first step to invest in a company or how to choose the right company to invest in and build a portfolio. There are many things to understand for an initial investment. You must have a good knowledge about your profits and losses. You also need to know how long you can successfully stay in the stock market.

Although the stock market does not guarantee long-term profits, it is a risk-type place, where you can be rich at any time or at another time to return to the downside. Therefore, to become a good investor, you must have full knowledge of stocks and their world. Here are some essential steps to help you better invest in the right company.

Select place to start

There is a simple saying that the beginning is correct, then all is well. Therefore, always invest in a company that is familiar to you. You should have complete knowledge of their background, management, and how those companies plan to make money in the Indian stock market. If you are satisfied with all of these things, this is your first step to get started.

Don’t go cheap, choose the right one, be it expensive

There is a big misconception in people that cheaper is always good. They do not see the reasons for its low price. Sometimes it can happen that the stock is cheap because your business is growing is slow or very inferior. Sometimes it can happen that the stock is expensive because in the coming years it is expected to grow faster. That is why instead of cheap you should buy those stocks, which are likely to be priced higher in the future for more profit, whether they are expensive.

Find revenue growth

This is your third step, where you need to see the revenue growth of the business. Sometimes it can happen when companies make more money in the long run. Therefore, stock prices rise, which generally begins with an increase in income; you will see the analyst’s income as a “top line”.

Look for profit margin or bottom line

The bottom line refers to the net income or earnings per share (EPS) of the company. Referring to “below,” describe the net income figure in the company’s income statement. The profit margin of the company is the main difference between income and expenses. A company that increases revenue while controlling costs will likely extend the margin.

Find out how much debt the company has

One of the most important jobs before investing, which is consulting the company’s balance sheet. As has always been said, the company’s debt is more likely to be more volatile because the higher income from the company goes to interest payments and loans. When comparing the company to its peers, see if the company is borrowing an unusual amount for its figure and its industry.

Discover a dividend

A dividend is not just a source of cash payment for a stock investor or this regular income; it is only a sign of the good financial health of the company. If a company can pay dividends, here you need to see the history of all payments and find out if the company is increasing the dividend or not.

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