Key Life Area: Financial
Are you behind on, or making minimum payments, on your credit cards?
Does it always seem like you have too much month left at the end of your money?
Are you confident in being able to retire comfortably?
Read on, for how to improve your finances, and feel better about your financial life area . . .
The financial area of your life can have a great impact on your level of happiness. It is important to be able to feel like you have enough, and not to have to worry about your means for tomorrow. Being able to do this requires patience and planning.
I know, mentioning financial planning can invoke thoughts of sitting down with a mound of receipts and documents with a professional money expert in order to make major preparations for your and your family’s future.
Depending on the complexity of your situation, this may be necessary to a certain extent, but what I’m talking about here involves the basics of:
• saving
• paying off debt
• investing
It also only requires a pad of paper, a calculator, spending records, and income expectations.
For the sake of your personal fulfillment and that of your family, it is important to plan out how much money you will need to save and grow. This applies especially to major expenditures, such as:
• vacations
• weddings
• college
• a car
• a house
• retirement
Keep in mind that this chapter is only a starting point, and is not intended to give you specific advice, so your plans may need to include sitting down with a certified financial planner (CFP) for a comprehensive strategy.
Pay Yourself First
The first part of financial planning, which you may already be familiar with from reading most any book on accumulating wealth, is to pay yourself first.
This is a very important step to take, as spending on “unknown extras” can catch up with you and keep you from saving anything at all if you wait until later.
The key to paying yourself first is to actually do it right away. This means to take a certain amount of your paycheck (experts usually recommend at least 10%) and put it away for savings.
This process should be done immediately – right after paying your essential bills (such as rent and utilities), and before making any expenditures -and through automatic deduction if possible.
The best way to do this, is to request your bank to automatically transfer a certain amount of money from your checking account to your savings account, on the same day each month that you receive your paycheck by direct deposit.
If you perform this action for each paycheck, you will have a definite amount of money you will be growing to be put toward major purchases or expenditures, or to hopefully have for a rainy month!
Steps to a Financial Plan
Okay, so you’re going to be paying yourself first every month – what do you do then? Now you can sit down and plan what to do with the excess funds you will have soon retained.
Alright, here are the steps to how your financial plan can work:
Step 1 -Keep detailed records of your income and expenses so that you can track where your money is going. If you have a computer, you can use a program like Quicken to organize your accounts and transactions.
A great free website you can use is www.https://mint.com. It handles your budgeting, credit cards, and investments, all in one place.
Step 2 – Set up a budget based on your expected income and expenses where you include your first expense (after essential bills) as a payment to your savings.
See how high you can make this payment (to yourself) and still meet your other budget items – aim for at least 10% of your income.
If you have trouble meeting your budget while paying yourself 10% of your income, try “trimming the fat” of your planned expenses by considering lowering those of categories such as
• entertainment
• fast food
• dining out, or delivery
• extra cable channels
• cell phone plans
• internet speed
Giving up some indulgences may prove to be worthwhile in the long run to allow for expenditures such as buying a home or funding your retirement.
Step 3-Add up your savings self-payments for one year and write down that amount.
Example: $200 monthly self-payments x 12months = $2,400 annual savings
Step 4 – Think about and determine what you want to put your soon to be growing savings toward. Write down each item or event, and put next to it the expected necessary funding amount and how soon you expect to pay for it.
Examples: Vacation: $1,200 in 2 years
House down payment: $10,000 in 4 years
The sooner you start paying yourself first, the better you can benefit from the miracle of compound interest. The longer the duration, the larger the increases in your money become as your interest from later years builds upon your savings and already added interest from earlier years. In fact, it has an almost exponential effect.
Guide to Reaching Your Financial Goals for a Bright Future
Financial planning is essential for a lifestyle of less worry, if you want to be able to meet certain lifetime goals, such as buying a house, purchasing a car, sending your child to college, and saving for retirement.
At first, reaching these goals may seem daunting. However, with advanced planning and consistent funding, they may all be reasonably attainable.
Now, you need to consider what financial instruments and accounts to use, in order to meet your financial goals.
For simple, yet in-depth explanations and information on developing a financial plan, the accounts and instruments you can use, and different approaches you can take, you can go to https://smartasset.com.
Financial Planning Instruments
Figuring out how much money you may need to save up, and how much interest you may need to earn, given certain interest rates, may take some planning.
For help in this area you will need a financial calculator. Websites such as https://pigly.com or https://bankrate.com have calculators to choose from, depending on your situation and objectives. You can also turn to a Certified Financial Planner (CFP) for guidance in this area.
Here is a list of some of the more common money instruments that exist in today’s markets. Following the list is a general guide to suggested timeframes and annual returns of the given money instruments, based on expert opinions, with risk taken into account:
Savings account– a place to deposit money (normally a bank) to earn interest
- typically earns higher interest than a checking account
Money market fund– liquid fund that usually is in safe, short-term investments such as CDs, Treasury bills, and short-term corporate bonds
- may earn higher interest than a savings account
Certificate of deposit (CD)– deposit of funds issued for a specific term, such as 6 months or a year
- typically earns more than savings or money market accounts, but you incur a penalty for withdrawing funds early
Bond– issuance of debt (IOU), which is paid to the holder in the form of principal and interest
- common types include Treasury, municipal, and corporate bonds
Stock– share of ownership in a company
- you can make gains through rise in price and/or dividends paid out on company earnings - you may also lose money through price drop and/or poor company performance
Mutual fund– large pool of money from investors used to buy a group of financial instruments, usually overseen by a manager
- common types include stock and bond funds, and real estate investment trusts (REITs), or any of these combined.
- index funds are unmanaged lower-cost mutual funds that are set up to track certain market index benchmarks
Exchange-traded funds (ETFs) – similar to mutual funds, except can be traded on the market throughout the day
Real estate – ownership of property, including land and/or buildings
- certain tax advantages can be gained through real estate investing
Recommended Timeframes for Investments:
• 0-6 months– savings accounts or money market funds
• 6 months – 3 years– CDs or bonds
• 3 + years– bonds, stocks, mutual funds, real estate, or a combination
Interest rates can change at different times – check with your preferred financial institution or shop around for different rates.
For the most part, safer places for your money are:
savings accounts
money market funds
CDs
conservative bonds
However, to earn higher levels of interest or gains, you may need to take on more risk with holdings such as:
stocks
mutual funds
ETF’s
Stocks and mutual funds have different levels of returns than those previously listed. They can earn higher levels of return, but can be riskier, generally over the short-term (0-3 years).
Over the long-term, the general market of the largest U.S. stocks, known as the S&P 500 Index, has averaged about 8-10% annualized total return.
However, it has gone down in some years, and can be inconsistent over the short–term as well.
For this reason, most experts suggest holding stocks, mutual funds, and ETF’s as long-term investments.
They also recommend diversification of your assets, so that when some of them go down in value, the others rise in value, balancing out your portfolio.
This may mean having a diversified portfolio of stocks (and international stocks), bonds, and/or REIT’s. However, there are many different types of funds and risk/return profiles, and no person has the same goals and situations, so it may be necessary to consult with an advisor. If you want to create one yourself, this article on asset allocation may help.
If you want to focus on owning individual stocks, you may need to have the time to research the companies, to make sure they are financially sound.
If you decide to use this strategy, I recommend learning from books, articles, and YouTube videos about legendary value investor Warren Buffett.
If you know that you do not have the time to spend researching companies, or that you do not have the temperament to handle stock price fluctuations in the market, don’t worry. Buffett has an alternative for you to still come out ahead by investing in stocks long-term. He recommends putting your money in an index fund (such as the S&P 500 stock index) periodically, by “dollar-cost averaging.” To learn more about this method, click on this link:
Warren Buffett: How You Should Invest in 2022
For practical and proven investing advice that follows the same principles, and is easy to understand, you can learn from Everything Money.
Whatever method you use to invest, however, should be a part of a solid comprehensive financial plan, that takes risks, and timelines, into account.
The Magic of Compound Interest
According to legend, Albert Einstein was asked: "What is the most powerful force in the universe?"
His response: "Compound Interest."
The sooner you start investing, the better you can benefit from the miracle of compound interest.
The longer the duration, the larger the increases in your money become as your interest and gains from later years builds upon your savings and already added interest and gains from earlier years.
In fact, it has an almost exponential effect.
To learn more, read my blog post on the subject about how to take advantage of compound interest for financial flexibility or freedom!
Tax Structures
For particularly common long-term financial targets such as retirement and education, the government is providing assistance in the form of tax-sheltered accounts so that you can save and grow your money tax-deferred, and/or with tax-free withdrawals in some cases.
Over the long-haul, this can have a tremendously positive effect on how much your funds can grow for these purposes.
You can check out the types of retirement plans available by contacting almost any major financial institution. Many experts recommend considering any of these plans as a staple in your overall financial plan.
Here are some of the most common conventional structures:
· Individual Retirement Account (IRA)– tax-sheltered personal retirement account
Traditional: tax-deferred, so you contribute to them with pre-tax money
Roth IRA: contribute post-tax money, and withdraw from them tax-free under certain guidelines
· 401(k) or 403(b) plan– tax-sheltered employee (401(k)) or government (403(b))–sponsored retirement plans which may be contributed to by employees
- many companies offer to match contributions to accounts
· Section 529 Savings plan– tax-sheltered account which can be contributed to for college savings for a child
- designed to be used for college and graduate school expenses
· Simplified Employee Pension (SEP) IRA and Savings Incentive Match Plan for Employees (SIMPLE) IRA plans– retirement savings plans for self-employed individuals
- these plans may have higher tax advantages than traditional or Roth IRAs, or 401(k)s
For information on the new Secure 2.0 Act regarding tax structures, click the following link:
https://finance.yahoo.com/news/secure-2-0-act-retirement-150042550.html
Financial Plan Summary
Taking all of the previous information and applications into account, here is an example of how your overall outline for your financial plan might look:
You will need to estimate the consistent amount of monthly funding you will need to contribute to reach each goal, based on the expected interest, and gains from the previously listed financial instruments and tax structures.
(the numbers are for example only, and are not calculated, or meant for actual application)
Example of Financial Plan Outline:
Monthly self-payment: $500
Annual savings amount: $6,000
Emergency fund:
Goal: $1000 in 3 months
Savings account
Current: $250 cash
Retirement:
Goal: $250,000 in 30 years
Roth IRA
Current: $2,000 ABC mutual fund
Goal: $100,000 in 20 years
401(k) plan
Current: $5,000 XYZ index fund
Child’s College Education:
Goal: $20,000 in 10 years
Section 529 Savings plan
Current: $3,000 Bank CD
Car Down Payment:
Goal: $2,000 in 2 years
Individual account
Current: $500 ABC mutual fund
Cell phone:
Goal: $300 in 6 months
Individual account
Current: $75 savings account
Now you have a solid outline for your financial plan. However, you also need to consider how to handle paying off debt, as a part of your overall plan.
Paying Off Debt
“If you find yourself in a hole, stop digging.”
If you find yourself caught up in consumer debt, try to pay it at the same time as putting away savings in order to build fiscal stability. Remember to still pay yourself first.
For information on paying off credit cards, go to: https://www.daveramsey.com/blog/how-to-pay-off-credit-card-debt
or:
https://www.experian.com/blogs/ask-experian/credit-education/how-to-pay-off-credit-card-debt/
Note: You may wish to maintain a limited balance on your credit cards, that you pay off each month, in order to keep good credit. For general information on achieving and maintaining good credit, go to:
https://www.experian.com/blogs/ask-experian/credit-education/improving-credit/building-credit/
If you’re wondering about how much money percentage-wise, to put toward saving, paying off debt, and investing, some people have different strategies.
You may want to save money for an emergency fund, while maintaining a limited credit card balance paid off monthly for good credit, first. When you have established enough savings to cover your expenses for a few months if you lose your job, then you may want to begin investing for long-term goals.
If you can’t pay off the balance each month, your goal may be to pay off your credit cards first, if they have interest rates at 18% or higher, before investing. It is very difficult, as legendary investor Warren Buffett has said, to earn 18% annual returns, or higher, on investments.
Giving
Besides paying yourself first, one thing that most books on wealth-building stress as an important part of money management, is the act of giving back.
Giving a portion (some experts suggest 10%, but only when it makes sense, after you already have savings) of your money to a charitable cause or causes, can have a great benefit to the community, but it also has an invaluable affect on the life of the giver. We have all needed help at one time or another, so it feels good to be able to give back.
Financial Life Area – My Own Story
Years ago, I decided to put a financial plan together. I wanted to put money away for savings and for retirement. I had a set salary, and to maximize it, knew I had to create a budget.
Paying Myself First
I had read about the importance of “paying yourself first,” and so the first item that I put in my budget was a savings payment. This payment came before any other non-essential bills and was nonnegotiable.
My challenge was to adapt my other flexible expenses to then meet my budget. These included food, supplies, and especially entertainment. Once I was able to do this, I felt a sense of security and stability.
Meeting My Budget
Each month, I took my savings payment and put money into my retirement account, into stocks. The rest of my money went to meeting my needs and expenses outlined in my budget. I had developed a system for my finances that helped me to keep them organized and save money.
Having Savings to Depend On
When I lost my job, which happened a couple of times, I had money put away that I was able to depend on while looking for another position. Unfortunately, it was from my retirement account.
That is why it is important to have savings, and build an emergency fund, first, and then contribute to your investments for your long-term goals.
So, by having a financial plan, you will be able to put away funds for savings, retirement, and other goals, that would have otherwise gone toward excess consumption. It will allow you to gain freedom and better manage your financial future.
Note: For information on how to invest in high-quality stocks for long-term goals, read Invest Like the Best, below, to learn how to possibly achieve high capital returns through value investing. You can realistically potentially get 10 - 15% returns on average, annually, over the long run, using this method).
Conclusion
Financial planning should be comprehensive, but does not need to be overly complex.
With the information given, you can change your mental outlook from concerned to worry-free, knowing that you have your financial goals and methods of reaching them in-hand.
You will then be on your way to building the life you want, knowing it’s built on a solid foundation and plan.
A great article on this topic in general can be found at: https://smartasset.com/financial-advisor/what-is-a-financial-plan.
Note: The information in this writing is not fully complete, and does not include items such as insurance, so it is recommended that, for a complete financial plan, you consult with a Certified Financial Planner, who is experienced, and with whom you are comfortable.
Update: Here are a few articles that simplify financial planning, including one about the importance of having different types of insurance:
Financial Planning: Can You Do It Yourself?
Why Insurance Should Be Part Of Your Financial Plan
Addendum: How to Approach Investing In Individual Stocks By Value Investing
Invest Like the Best: The Fundamentals of Value Investing
Are you interested in investing in stocks, but don’t know which companies are going to be around in the next ten years?
Do you want to save and grow money for a long-term goal, such as retirement, or your child’s college education?
Have you heard of the different styles of investing, but don’t know which is best for you?
Time and Energy
The truth is, many people don’t have the time, or energy, to research individual company’s stocks or industries, to see which companies might be best to put their money in. So they watch different business and finance shows, where “experts” are touting which stocks to buy or sell now, for various reasons. Or, they listen to stock “tips” from friends, or in social gatherings.
If you don’t feel like you can spend enough time each week to do your own stock research, you may be better off investing in index funds or balanced funds, and that is not an insult. Finding the right stocks at the right price, takes time and mental effort. I list a link below to a video on how investing in an index fund is recommended for most investors who are uncomfortable buying individual stocks.
There are different types of investing out there, such as investing in growth, day trading (with technical analysis), and value investing (with fundamental analysis). Today I am going to teach you about the only kind of stock investing I am well familiar with, and that is value investing.
Before you read any further, watch this video for an easy to understand and practical explanation of value investing, and why it works best:
THESE STOCKS are performing the BEST in the Long Run
Based on the Fundamentals
The reason I believe in value investing, is that it is based on fundamental analysis, and, of course, this website is based on the fundamentals.
Now, if you’ve heard about value investing, you’ve probably heard of the most famous investor of all-time, and one of the world’s wealthiest people, Warren Buffett.
He runs the company Berkshire Hathaway, which has averaged annual returns of over 20% since 1965. This is nearly twice as good a return as the general stock market.
What’s funny is that, even though he talks about his investing strategy publicly, most people tend to follow different ones, or claim that other strategies are doing better at the time.
The reason the way he invests is so successful, though, is that he invests for the long-term, while the market fluctuates over the short-term, making it look like he may not be doing as well currently.
You Can, Too
I have read and followed value investing and stocks for a couple of decades, and what I have found is that it works, even for a common investor. Today, I am going to tell you how to do it yourself, and get better returns, with less worry.
The whole idea behind value investing, is to value a company based on an estimate of how much money will be returned to the investor, over the life of the company, or over a given set period of time. To do this requires fundamental analysis of the company’s financial statements.
Now, there are different types of ratios that can help determine the right price for a company, such as P/E ratios, Price/Book ratios, and Price/Sales ratios, among others. While these can be useful, the main number that Buffett claims to use to determine the “intrinsic value” of a business comes from the Discounted Cash Flow method.
The Ultimate Method
In this method, the company’s future cash flows are discounted back to the present using a “risk-free” interest–rate. This is to compare it a similar investment such as the treasury bond, which is considered “risk-free” because the government has a very low chance of going out of business. In this way, the company’s annual cash flows can be considered similar to a bond, and the coupons it pays.
So, why is this important? This valuation method takes actual dollar figures into account, as opposed to speculating whether a firm will grow quickly, or make some discovery to prop up the stock price. However, it often takes patience to make a return on your money, since it requires the value of the company to go up over the long-term. This is probably the main reason most people invest in other ways.
So, while this is the most essential calculation, we first need to make sure that this company is strong enough financially to be around, and fight off competitors for the next several years or the rest of its lifetime. To do this requires some prep work.
If you know that you do not have the time to spend researching companies, or that you do not have the temperament to handle stock price fluctuations in the market, don’t worry. Buffett has an alternative for you to still come out ahead by investing in stocks. He recommends putting your money in an index fund (such as the S&P 500 stock index) periodically, by “dollar-cost averaging.”To learn more about this method, click on this link:
Warren Buffett: How You Should Invest in 2022
Ok, so if you have time to spend, you’re prepared mentally to do research, and you’re ready to wait for months, maybe years, to get the optimal return on your money. I am going to take you step by step through how to value invest using fundamental analysis.
First – Macrotrends.net is your friend. On this website, you will find almost every statistic that you need about the company you are looking to invest in. You are going to do a selective screen, to weed out any company that might have trouble financially:
1. Go to Macrotrends.net
2. On the main search bar, type in the stock you are ready to research.
3. Click on the company’s “Earnings Per Share” on the drop-down menu.
4. Scroll down the given page and look at the Annual Earnings per Share.
5. Look for a pattern of whether the earnings are going up steadily each year, or at least over several years. If so, that’s a good sign. If the earnings are unpredictable, or cyclical, you may not be able to count on the stock price changes being predictable, either.
Next:
1. From the page you are on, scroll up to and select, from the top bar, “Other Ratios.”
2. Now, from the bar below, select “ROE.” This is short for return on equity, which, basically, means the return on your investment.
3. Scroll down to the ROE percentages on the right. Look to see if the percentages are at least 15%, which is the common minimum value investors look for. If they are for some years, and not for others, then it might be cyclical, or not competitive.
Next:
1. Go back to the menu bar, and select “Financials.” Check the company’s revenue on the top of the Income Statement, and see if it is going up every year. This is a sign the company is growing. If it stays steady, or is going down, then your returns are likely to drop, as well.
2. See if there are any “Research and Development” expenses. These can be a drain on the company’s income, especially if they are going up. They are standard in some industries, though.
3. Check to see if the “Net Income,” is going up annually, also.
4. Examine the “Shares Outstanding,” and see if they are going down each year on average. This means that the company may be buying back shares, which can increase your returns, just like a dividend can.
Next:
1. Go to the menu bar, and select “Balance Sheet”
2. Check just one thing on the Balance Sheet: See if the “Cash on Hand” (on the top line) is at least 1/4 of the amount of the “Long-Term Debt.” This is important, as a lot of debt can cause problems if the company goes through any adversity. Ideally, you want to see a high amount of cash on hand, and/or very little to no long-term debt.
Next:
1. Go to the menu bar, and the “Financials” sheet again.
2. Click on “Cash Flow Statement”
3. Look at the middle of the page, and see if the “Cash Flow from Operating Activities” is going up consistently every year or, at least every few years, on average, which would be ideal. Also, it should be higher than the “Net Income”, which is listed at the top of the statement.
Finally:
1. Go to Google (the regular Google search bar), and type in the company’s ticker symbol, and “intrinsic value”. So if you are looking up Widgets, Inc., and the ticker symbol is WGT, type “WGT intrinsic value”
2. On the page it pulls up, click on “WGT Intrinsic Value: Projected FCF” on the Guru Focus page. Since calculating the Discounted Cash Flow Method is complicated, you’re going to let Guru Focus do the estimating for you.
3. Read the paragraph near the top of the Guru Focus page that says, “As of today, (your company’s ticker symbol’s) Intrinsic Value: . . .
Read down to where it says “Price-to-Intrinsic-Value-Projected-FCF of today is . . . “
4. You want the number it gives there to be lower than 1.0, which is fair value. Ideally, you want the number to be 0.5 or lower, which means it is being priced at half of its value or less. This is known as a “margin of safety”, meaning that it is unlikely for the company’s stock price to go much lower, based on its solid financial foundation.
5. Keep in mind this number is based on future cash flow estimates, so it is actually an estimate of a range of projected cash flows, which is not always totally accurate.
Conclusion
If all of these tests pass these screens, then, in my opinion, you may have found a solid value stock at a good price. Just remember that, if you purchase it, you may have to wait awhile (possibly months, or even many years) to see good returns. That is why value investing is known to be long-term investing. Also, and this is an important point, you need to purchase the stock at a good price, otherwise, you may not see good returns, even if the company meets all of the other screening criteria.
Warren Buffett’s famous quote about value is: “I would rather buy a wonderful company at a fair price, than a fair company at a wonderful price.” So you may be alright purchasing a stock at fair value (example - intrinsic value: 1.0, on the Guru Focus page), if it has really good financial fundamentals.
Also, there are more and other criteria to screen, but the list above is what I generally look for.
Another important point is that if you cannot understand the business the company is in, you should avoid investing in it. Stick to businesses you understand, or you may have a difficult time valuing the stock, or knowing if and when the company is in trouble.
An important step is to look up the latest annual report of the company, usually found under the “Investor Relations” section of the company’s website. From this report, you can generally tell if you can understand the business, and the direction it’s heading in.
Buffett, and other value investors, also usually try to determine if the company has a “moat”, or a durable competitive advantage, so that they can hopefully count on the company continuing to grow over the long-term. This can be in the form of an established brand, patent, network, or low-cost of capital, among other factors. If you are not sure if the company has a moat, usually a business that passes the above criteria has one of some sort.
Before buying any stock, it is generally also good to check the news on the company, so you may want to do a Google search on the company’s news. Also, The Motley Fool and Seeking Alpha are a couple of sites that have good articles on companies, based on their fundamentals, so they may be good resources to check on the company (I usually do) before buying a stock. Just go to their websites and enter the company name or ticker in the search bar at the top of their home pages, and scroll down for the list of articles.
If you have a lot of stocks you want to screen, you may also want to check the intrinsic value first, since, the stock may be priced too expensive to buy, anyway. If it’s priced too high, then just move on to the next stock to screen, or put it on your watch list, and wait for the price to go down. You can easily create a watchlist on Yahoo! Finance.
If you would like to perform the discounted cash flow method yourself, I recommend learning from videos such as this one:
Discounted Cash Flow - How to Value a Stock Using Discounted Cash Flow (DCF) - DCF Calculation
There are many more videos on YouTube that you can learn from, as well. Just note that for the discount rate in the calculation, Buffett says he uses the average long-term Treasury Bond rate (around 4%) as the “risk-free” rate, instead of the commonly used WACC (Weighted Average Cost of Capital), which usually is 10-12%.
But, even he admits that, whatever the rates, he generally uses opportunity cost to determine his investments. In other words, he tries to find the safest investment with the best likely return compared to other opportunities. The “risk-free” rate simply represents the highest return he could get without risk, theoretically.
For a simpler calculator, to estimate your optimal rate of return on a stock, I recommend the following link: https://www.hamishhodder.com/spreadsheet
I also highly recommend all of the spreadsheet above creator’s free Youtube videos regarding investing, as he has simplified, made more easily understandable, and been successful with, all of the important steps required to be successful with the methods used by value investors such as Buffett. They are, by far, the best sources of information on the subject that I have found on Youtube, and the internet.
If you’ve made it this far in this section, you may be wondering, is investing really this difficult and time-consuming? If you think that this section on value investing is too long or complicated, it’s supposed to be. The reason is: you are looking to buy portions of actual businesses, and to be able to estimate what they are really worth, you have to do your research. Otherwise, you are speculating on their values, which is a common, but not usually successful, practice. So you may need to spend an hour or more each week researching companies you may have an interest in. You do not need to find many companies to invest in to be successful, maybe only a few. You just need to read up on them, to be as confident as possible about their long-term success, as well as their current market value. Then just buy them at your estimated right price, and keep up with their business to make sure they maintain good practices, and stay profitable over the long-term. It’s not too difficult, but it definitely requires patience.
Disclaimer: This article is meant for informational and example purposes only. I am not a financial advisor, and am not promoting the purchase or sale of any kind of securities. Also, I recommend that investing in stocks should be done within the framework of a comprehensive financial plan, with risks taken into account. You may also want to consult with a Certified Financial Planner.
Good luck on your stock research, and I wish you good returns.