THINGS TO LOOK FOR WHEN BUYING SHARES

Whenever you want to buy share/stocks, there are certain things or information you need to fins before buying. Some of the of the few most important things you need to consider are discussed below.

1.KNOW WHAT YOU ARE LOOKING FOR
   Primarily people/investors buy share to receive an income. this income comes in the form of dividends. For a high income, choose company that pay high yield and compare it with others in the sector. You can work out the yield by dividing the dividend paid by the price of the share. Example if a company's share price is $100 and the the dividend paid per share is $10, then by calculation the yield is given by1 10%

2. DECIDE WHAT LEVEL OF RISK YOU CAN ALLOW
    Before buying shares, you need to decide the level of risk you are prepared to take. Are you prepared to accept shares that don't carry too much risk or are you prepared to accept higher risk in return for the prospect of higher returns.? Shares in general are viewed as moderate risk as compared to other types of mainstream investments. One therefore have to consider the level of risk he/she is willing to take.

3. KNOW THE COMPANY
    Knowing the company may sound simple but many investors do not know what business their company is in. Companies quoted on the stock market are sorted into sectors to give a broad idea of the company's main activities. News papers can list their share information by sector so it may be easier for the public to see which sector a company is in.

4. BE ON THE LOOK OUT
    Many things will affect the value of the shares you own. It's therefore difficult to factor every possibility into every decision and even harder to keep an eye on all the things you'd need to be aware of. One thing to do is to think about the impact of things you read or hear about in everyday news. Example a higer oil price should have a positive effect on the the price of oil companies. But it will hurt a company like the airlines whose fuel bills will increase.

5. DO NOT PUT ALL YOUR EGGS IN ONE BASKET
    Spreading your money across various companies  helps reduce the overall risk. Not every investment decision you make will produce the desired result. Therefore spreading them evens out the odd. Diversity means investing in different sectors too. Diversification therefore helps to reduce risk.

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