Nowadays, many people have already aware of the importance of investing. They have already known that saving is no longer profitable, especially for developing their asset or wealth. That is why people are trying to find and research what kind of investment is suitable for their needs. However, if you know nothing about investment and are interested in trying investment, then you are in the right place. The following article will give you information about things to consider before investing and choosing the right stock.
Things to consider before purchasing stock
Investment in the capital market is still the prima donna. However, care is needed in choosing a stock portfolio that has the potential to provide cash. We have summarized five things to consider when choosing the ideal stock for you, business novice investors.
Look for profitable companies. Choose issuers that have positive profit growth. In addition, you also have to pay attention to the stability of the issuer’s income and profit by looking at the data for the last ten years. You also need to pay attention to cash flow items and operating activities. If you find the cash flow figures are close to net income, it can be said that the company is good.
Return on Equity (ROE) value above bank loan interest. Choose stocks with a return on equity (ROE) above bank interest. For example, if the loan interest rate from the bank is 11 percent, the ROE of the selected stock should be higher than that.
Debt to Equity Ratio (DER). Although almost 90 percent of issuers must have receivables, the amount and debt to equity ratio (DER) must be considered. Basically, this method is the same as sharia-style stock investment, where you do not have issuers with high debt or a debt ratio of more than 2x data equity.
Check the financial statements. This method can help to get to know the management of your target company. If the company’s net income is positive, but the cash value is minus, it can be said that the company’s management is not good.
Apart from those points above, you also need to seek knowledge about the current capital market conditions. Investors must diligently read economic news and find out about what is happening, both in the stock market and in the world in general.
Learning about trading stock easily
What do you know about stocks? Let’s understand what a stock is before investing? Stocks are a type of investment that is a high risk, high profit; for greater profits, you must also be prepared to put more capital.
- Starting from a Small Nominal
For the first transaction, try to choose your favorite issuer at an affordable price and nominal. For example, a stock that has a price per day is $5, make a purchase one lot first, a total of $500. Understand the transaction process in the application, try to pay attention to price movements, and understand each button function/feature. By familiarizing yourself with the use of the most application, you will be able to maximize your trading strategy in the future.
- Choose Stocks with Low Risk Level
In choosing stocks, it is very important to know how healthy the company is. A healthy company has a relatively lower level of risk. It is recommended that beginners choose stocks that have entered the Bluechip list (large companies with a stable income and relatively small liabilities).
- Learn Stock Movement
When you want to trade, try to study stock movements with technical analysis. By learning this technique, you can conclude where the stock price will move next. There are many resources you can visit to learn more about stocks trading.
- Set Price Target
After studying the movement of the stock and observing the news, set a target price (target price). The best buy target is near the support level (the level to buy), while the best-selling price target is at the resistance level (the level to sell). Avoid buying prices at the resistance level because the price has the potential to fall to test the support level of the stock price.
- Don’t Force Trading
Make sure you are not emotional when trading stocks. Avoid being greedy or fearful when entering a buy or sell order. The state of loss or profit can indeed affect your decisions when trading. If this happens, take time to rest and do other activities so that the emotional state does not overwhelm the mind.
- Observe the Economic and Political Situation
Stock investment is best done when the economy is stable or experiencing an increase (bullish market). Reading the news is very necessary to find out what may happen to the market. For instance, in this time of the pandemic, stocks in the health sector may rise. IPOC stock or Social Capital Hedosophia Holdings Corp. III stock has merged with a medicare company Clover Health. As medicare will mostly need, IPOC stock seems to increase in the next following years.
Is IPOC stock a buy?
Based on those following tips, purchasing stocks need so many considerations. One of them keeps paying attention to the political and economic situation. In this time of COVID-19 pandemic, medical and health care are more likely to have a good performance as this sector is needed a lot. IPOC stock is the combination between Social Capital Hedosophia Holdings Corp. III and Clover Health. Social Capital Hedosophia Holdings Corp. III is technology-oriented investors and entrepreneurs, while Clover Health is a medicare company. Last December, IPOC stock rose to 7.9%. When the merger news emerged, the stock is more likely to keep rising. The main reason is that Clover Health grows its company in the health care sector rapidly. In fact, Clover Health can get up to $457 million in 2019. In 2021 is expected to generate up to $880 million, while in 2023, this company is expected to generate $1.7 billion. What about you? Are you interested in putting your money into the health care sector? Research more and start investing as soon as possible.