How to choose stocks for long term investment in India?

Short Answer

There are various terms that play a huge role in determining how to choose stocks for long term investment such as P/E ratio, dividend consistency, etc. For a more elaborative information head below and read the explanation given for better understanding.

Detailed Answer

INVESTING AND ITS TYPES:

By investing, in general terms, it means allocating and depositing your money in a particular place from where you can expect to get benefited in the near future. There will always be an expectation of return whenever and wherever you invest which can help her/him to gain financial worth.

An individual can invest in various sectors such as: Bank fixed deposit, Direct equity, debt mutual fund, stock market, crypto currency, etc.

There are two main types of it:

  • Short term investing: This investing lasts for a very short duration of time i.e., from hours to days. It is very risky and requires market knowledge and requires knowledge about technical analysis.

-Long term investing: This investing usually happens when individuals want to make money in long term. It requires a lot of patience from the depositors and also long run study about the companies they are planning to invest in.

INVESTING IN STOCKS:

Investing in stocks gives an individual a part of ownership in the company where they are depositing their money. Stocks is something which gives highest returns to individuals when they invest money but at the same time it is very risky, requires knowledge about the market and the company to maintain profits.

This requires the brokers or the individuals to have good analytical skills so that they can technically and fundamentally analyze the company before investing else he/she might end up loosing quite a lot of money.

IMPORTANCE OF LONG-TERM INVESTMENT:

Long term investing is something which gives the individuals or investors a clean and clear opportunity to make money without high risks. This is something which requires patience and discipline from them so that they can take enjoy all the perks by earning higher profits.

It is not essential that the invested money will grow everyday but can turn out to be best investments in long run.

HOW TO CHOOSE STOCKS FOR LONG-TERM INVESTMENT?

There are various features which are taken into consideration while picking a perfect stock for long-term investment:

1. To understand the economic conditions:

It is very important to understand the economic conditions of the country as it directly effects the stock market. Stock market does not rapidly change depending upon the financial scenario, but it does shows change as per the advancement or recession of the nation.

2. Assessing the P/E ratio:

The price/earning ratio helps in determining if the stock is under or overvalued. Higher P/E ratio is considered better, and it also helps investors to decide if they want to invest in that particular stock or not and the low P/E value does the opposite. To understand if the stock is actually valued at a good price or not, the P/E of company is compared with the P/E of that sector.

3. Dividend consistency:

The consistency of the payment from the company where the individual invested in stocks is what can assure him/her of the stability of the company. There are various timelines for which this will matter as regular dividends will help in understanding the constant stability of the company.

SOME STOCKS TO INVEST IN FOR LONG-TERM:

This is strictly just a recommendation and is for information purpose only as per March 2021.

  • HDFC Bank
  • Kotak Mahindra Bank
  • Hindustan Unilever (HUL)
  • State bank of India (SBI)
  • Tata Consultancy services limited.
Tagged With: investingtypes of investinglong term investingstock marketchoosing stocks
Categories: Stock Market
Ask your query and our expert community would be happy to help
Discussion (1)

    No one can predict the future. But based on past financials, growth projections and future growth, investing in stocks in the long term is quite the possibility. However, if you look at the ways, then conducting a thorough fundamental analysis of the company should help long-term investment.

Related FAQs

For long-term investments, which channels are viable for significant returns given the current market scenario?

For significant returns, one can look forward towards stock funds, real estate investments, dividend stocks, target-date funds and so on. Each one of these investments does offer something better to investors based on their capital of investments made.

Are CADILA, CIPLA, BIOCON the new stocks to invest in for the long term?

CADILA, BIOCON, CIPLA might be the stocks of tomorrow as they have provided significant returns owing to the pandemic and the demand for medicines and medical equipment that they produce. Furthermore, the demand will continue to surge even if the pandemic is controlled, ensuring that enough storage of medicines to prevent such a pandemic from arising is prevented.

What is difference between Long term vs Short term investment?

Short term and long term investments are the two types of investments, allowing people to invest in assets which can help them to generate a profit in the future. Both are important in there own ways and it is important to diversify also. An investor needs to be mindful about investing in both.

Is it a good time to invest in stocks? Bullish Stock Market

There are several questions that one can ask your advisor. These questions include whether its good time to enter or exit the market? Should in exit from debt and move to FD? do I continue my SIP portfolio? and other such questions.

Are healthcare stocks the new best investment for significant returns?

Healthcare stocks are quite beneficial in the given day and age, all thanks to its impact on the country. They have grown in the evaluation and even providing considerable returns that nobody would have predicted. Therefore, research the stocks that you wish to invest in in the long term and see how it pans out over 10-20 years.

Is Ventura Securities safe for trading and long term investing?

Ventura Capital is a Mumbai-based Full-Service Stock Broker that was formed in 1994. It offers Free account opening and 0 AMC charges but it charges software access charge from Rs 1000 to Rs 72000 per year which is refunded in terms of brokerage.

What are Stock Market Timings in India? Normal Trading Hours

The operating hours for the Indian stock market is from 9 AM to 4 PM while remaining off on government holidays and weekends.

Can NRI invest in Indian stock market?

Yes, NRIs can invest in Indian stock market. It is essential for the individual to check if he is considered as NRI or not according to the norms of the government. If yes, only then he can invest. There are also certain rules and regulations that must be followed.

What are the tax implications on investments done outside of India?

Every Equity Investor should maintain some part of their portfolio diversified into foreign companies. This can be achieved through Foreign brokers or Mutual Funds and ETFs that invest in abroad markets. Investing abroad has many benefits such as exposure to the top global companies like Facebook, Amazon, Ford, etc. The tax implications on investments made outside India are different as foreign Equity is taxed as Debt Mutual Funds

What are the types of ETFs available for investment?

Exchange-Traded Funds or ETFs are an investment tool that tracks particular securities like Equity, Commodity, Bonds, etc. ETFs are available for many categories from which one can choose from. These are listed on Stock Exchanges (NSE & BSE) hence there is ample liquidity and one can easily buy and sell these at their desired price during market hours. Some ETFs available for investment in Indian markets are Equity ETFs, Debt ETFs, etc.