5 Ways Beginners Should Consider Before Buying Stocks
5 Ways Beginners Should Consider Before Buying Stocks
Retail investors in the country are currently experiencing a very significant increase in number. This is positive news because the majority of investors are millennials.
Some may just want to start entering the capital market because of the high hype. Therefore, it is worth considering various things before deciding to buy shares.
The following are five basic things that you must consider before spending your money to buy an issuer. Come on, find out what it is!
1. The price offered is compared to the fair price
Before buying an issuer, of course, we have to see how much it costs. The price is then adjusted to the budget you have. However, it doesn't stop there, you also have to know what the fair price of the shares you are going to buy is.
It could be that the price offered is still relatively high, or it could be that there is a discount. Now, to find out what the fair price is, you can do a short calculation of the BVPS (Book Value Per Share) value.
2. The size of the 'market cap' of an issuer
Market cap or market capitalization in short is how much money you have to spend to buy all the shares of the company. Of course, when a company has a large market cap, it indicates the size of the company.
Therefore, there are the terms first liner, second liner and third liner stocks. Usually companies with large market caps are in the first liner line or also called bluechip stocks.
3. The company's ability to generate profits
When buying an issuer, of course you expect the value to continue to grow, right? In addition to the value that grows from capital gains, you can also get profits with dividends. However, not all companies distribute dividends to their shareholders.
So, you have to be observant in seeing which companies are able to provide these two advantages. You can also view the company's annual report to see the ability to generate profits each year.
4. What is the percentage of the company's debt?
Seeing how much debt the company has is equally important, you know. Do not let you buy shares from companies that have large debts. Instead of profit, you are even wary of placing your money in the company.
The easy way is you can see from the DER (Debt to Equity Ratio) value of a stock. Suppose a company has a DER value of 25 percent with a company capital of 100 million. So, the company has a debt of 25 million.
5. Prospects of the company in the next few years
One aspect that is no less important is knowing how the company's prospects will be in the future. You can see the possibility of the company growing in five years, ten years or according to your investment goals.
That way you can assess whether the company will experience an increase in profits or not. Do not choose a company that is likely to run out quickly for long-term investments.
Well, those are five things you should always consider before buying a stock issuer. So, make no mistake, yes, because your money is your own responsibility
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