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Investing in stocks is a time tested way to acquire and grow long term wealth. When a consumer invests in stocks, he or she is helping that company expand and grow, and that has a positive effect on the overall economy. Your stock is a representation of your ownership in and of that company. After you invest in stock, you have a claim on any future assets, profits, and dividends, that company may produce. Most stocks are bought and sold on an exchange, the two most prestigious US stock exchanges are the NASDQ and the New York Stocks Exchange. Analysts also pay close attention to the London Stock Exchange and the Japanese Stock Exchange, The Nikkei. Before you decide to invest in stocks, you should do some research on the company, in order to get a feeling for the company’s financial future and current outlook. While you may rely on the advice and counsel of your broker or financial advisor, you, as the investor, should have an understanding of some key areas. • Earnings: This represents the company’s growth. Ideally it should increase at least 10% annually. • Sales: Also an indication of growth, you want to see this increase every year. • Debt: The debt a company has accrued should hold steady or be reduced every year. A company’s debt should not be higher than its assets. • Equity should also increase every year. If these factors are moving in appositive direction, your investment is most likely a sound one. There are some other areas to consider when you are thinking of investing in a company. • Price to earnings ratio • Price to Sales Ratio • Return on Equity • Earnings Growth • Debt to asset ratio These ratios can provide some historical data about the company’s performance. Share prices of any given company are prone to highs and lows over the course of your investment. For those who invest in stock for the long term, their portfolio should be designed to handle market fluctuation. Short term investors will see the most risk, since they are not prepared to weather the high and lows of the market. Of course, analysts and brokers will do their best to predict which stocks will offer the biggest return on your investment. When designing your portfolio. Be sure it is diversified among many companies, industries, and areas. A truly diversified portfolio will not only have the consumer invest in stocks, but in bonds, mutual funds and real estate as well. When a person invests in stocks, they are investing in the company’s future growth and earnings. Stock prices rise and fall based upon supply and demand, and no one, not even Warren Buffet, understands the market all the time. A savvy investor will do his or her homework and create an investment portfolio designed to meet long and short term financial goals. While investing in stocks can be risky, nothing has given consumers a higher return. When you invest in stocks, you are almost guaranteed a higher return than when you invest in bonds or mutual funds. Are you looking for more information regarding investing in stock? Visit http://www.smart-investing-in-stocks.com/invite.html today for more information!
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