What You Should Be Looking For In An InvestmentFinance . Investment
Always look for investments where the value of the asset grows and where you’ll also receive a dividend. This is the magic two fold multiplier that is paying you an income whilst your asset is growing.
For example the value of CBA Shares have grown considerably and the dividend has consistently grown over the years.
Another example of this is Wesfarmers which has grown in share price value and the dividend has consistently grown over the years.
I’ll also give you a poor example such as Telstra where the share price has not moved beyond $7 (currently hovering around $3.50) however has provided dividends over the years. Investors really struggle seeing Telstra’s future value which is represented in their share price.
So what are the other factors to look out for?
The other factor I recommend is look for stable, traditional markets with small amounts of risk. For example banks have been a reliable investment and when there are identifiable risks governments usually assist as this is critical to the economy.
Look for growing industries with economies of scale such as technology, this doesn’t have to be limited to tech companies so keep an open mind. For example Domino’s is a company that has invested in technology. Just ask yourself what companies are adopting technology to service customers. These companies will be gold in the future.
The other factors are what’s important to the general population. Health is probably one of your top priorities and so you are likely to focus your efforts and money in this industry like everyone else. Governments also typically invest strongly in health care so with all the attention there are a number of companies to choose from.
Declining markets are one area to keep a focus on, you can do this by reading the key economic indicators on the ABS website. This is very important. For example construction in Australia is significantly down on last year that means there will be a number of companies exposed to this down turn and will likely impact on revenue which may lead to reductions in share values and dividends.
You should keep calm at all times, there have been stock market crashes multiple times throughout history and they have recovered. It may take a few years but the stock market always grows.
Also do you research I’m not going to tell you everything but this is a start to get you going. I suggest you spend one night a week focusing on investment until you get the handle on it.