finance
monthly
Personal Finance. Money. Investing.
Contribute
Newsletter
Corporate

 Technological advancements have made it possible for you to buy stock in the virtual space. Most people are looking to buy shares without considering the various aspects that affect the same. You need know-how in the stock markets to help you make an informed choice regarding the stock you want to buy. Here are some of the top factors that you ought to bear in mind when buying shares. 

1. Volume 

Some companies have many shares in the market. The stock they put up for sale may be lucrative and draw in a large number of people. However, this is not always the case. Some of the shares available in the market do not attract many investors making their sales very low. The volume for such stocks is on the lower side, meaning that your investment may not have considerable returns. You have to check the shares sold and bought in a day to determine the volume of the same in the market. Additionally, you can gauge whether your investment will have returns with minimal hassle or not. This element is crucial, and you have to be intentional about the stock you are buying and its volume in the exchange market. 

2. Management 

You buy shares from companies, and this necessitates the need for you to look at the management of the stock you are interested in. Read expert reviews on authoritative sites to know more about the product that you are interested in. Be keen to understand how the company works, and their ethics as this determines the stability of the same. The firm you buy shares from has to be stable for you to cash in through dividends and sell your shares for more than what you invested. Innovativeness, the management culture, and the competence of the managerial team and other employees are some of the elements that you ought to review. Companies riddled with scandals should be avoided at all costs. This is because you may lose your hard-earned money if the company goes down due to incompetence. 

2. Dividends 

There are various ways to make money once you buy shares. Most people believe that you have to sell your stock to recoup your investment and make a profit. This is not always the case; you earn dividends from the company where you own shares for as long as they belong to you.  Dividends are the payments that the company makes to you for holding their stock. However, not all firms pay this. You need to confirm that the company whose stock you are buying has a dividend payment plan for all the shareholders before investing in its stock. Companies that pay dividends should be on the top of your list. This is because the regular payment is a guarantee that the firm is growing and making money from its products and services. Ask customer support for this information if it is not readily available to avoid any surprises in the future. 

The three elements we discuss above are crucial but not the only ones that you ought to consider. The cash flow per share and market capitalisation are other vital factors that you need to bear in mind. The cost of the venture should be within your budget to avoid unnecessary expenditure. For this reason, you need to research the different types of stock and pick an ideal one for you. 

HSBC, the UK’s largest bank, posted a 34% drop in profit for 2020 and has signalled a “pivot to Asia” along with job cuts to compensate for the decline.

The bank reported a pre-tax profit of $8.8 billion from revenue of $50.4 billion in 2020, going slightly beyond analysts’ expectations of an $8.3 billion profit on income of $50 billion.

Part of HSBC’s losses, like those seen by Barclays, were caused by a sharp rise in credit loss provisions owing to the COVID-19 pandemic. HSBC set aside a further $1.2 billion in Q4 2020 to cover an expected rise in bad loans, bringing its total loss provisions for the year to $8.8 billion.

HSBC also reinstated a dividend of 15p, significantly above analyst forecasts of 10.1p, following the Bank of England’s lifting of its dividend ban in December.

Also on Tuesday, HSBC announced plans to accelerate its transformation plans. The bank is currently undergoing a major restructuring intended to reverse several years of underperformance, which will involve cutting 35,000 jobs and reducing costs by $4.5 billion by 2022. 11,000 jobs were shed during 2020.

 The bank also signalled its intent to focus on opportunities for growth in Asian markets. Stephen Moss, its head of strategy, will take on the role of chief executive for the Middle East, North Africa and Turkey, and will relocate to Dubai from London. More executive roles are expected to relocate to Hong Kong, HSBC’s historic home base.

[ymal]

"I am proud of everything our people achieved and grateful for the loyalty of our customers during a very turbulent year," chief executive Noel Quinn said in a statement.

Now we know that certain businesses can be seen as nonessential, and in such a large-scale health crisis such as the one we are in now, some are practically deemed obsolete. Those that suffered the worst are the travel, retail, restaurant, and events industries.

The anxiety that this has caused individuals the world over is unprecedented. Those who had enough emergency money stored up could pull through the uncertainty of the months ahead without a hitch. Now, the money garnered from employment is as unreliable as rain in a drought – as most companies from affected industries have enacted pay cuts, forced leaves – some have even declared themselves bankrupt.

It’s high time that you take a look at your finances too, and assess if you have been efficient in your investment decisions in the recent years. Now, more than ever, saving up for a rainy day is vital to tide you over and even keep your sanity in the middle of the large-scale ambiguity we are all living through now.

Here are some reminders on how to be wise about your investment decisions, no matter if you’re only beginning or have been in the business for quite a while:

1. Make sure to have an emergency fund stored up

Common wisdom is to have at least six months' worth of your income stored up as liquid in case any immediate spending is necessary. This should be the first thing you have in your portfolio in order to help you pull through when economic uncertainties inevitably hit.

2. Educate yourself on options that you can afford

There are many different ways you can invest – such as time deposits, government bonds, stocks, dividend-paying stocks, real estate, and money market accounts, among myriad others. Create a goal to build your portfolio, take into account all the risks and returns of each instrument, and diversify your mix. This will ensure more security for you in case of fluctuations in value.

[ymal]

3. Do your due diligence on whichever kind of instrument you choose

It is best to consult with an experienced broker of any of the instruments you wish to put your money on, so that you can get a better feel of which one is best for you. Do not be fooled by market insights, payout ratios, and other seemingly promising percentages that can blind your decisions. These numbers may mean something different from what they connote.

One route people choose to ensure high returns even with low initial investment is going for stock investing with accompanying dividend payouts. A dividend stock screener can help you understand the payout ratios, a company’s stability over time, growth rate, and other things that are important in making your decision.

4. Diversify across industries

As we can all see, industries that were soaring in profits for decades have now gone down. No matter how tempted you are to get into a fad that seems promising, make sure to keep a diverse mix across industries. This will help protect you from any unpredictable downturns that may come your way.

Keep these tips in mind as you move forward with your investment decisions. They may be conservative, but they will help you have a solid fallback that you can rely on when the salary or income you may have relied on each month becomes compromised.

Ian Sayers, Chief Executive, Association of Investment Companies (AIC)

Ian Sayers, Chief Executive, Association of Investment Companies (AIC)

With this month marking the 20th anniversary since Venture Capital Trusts (VCTs) were created, figures from the Association of Investment Companies (AIC) show that the level of aggregate dividends is at its highest annual level since VCTs were established.

The VCT sector paid out aggregate dividends of £240.3 million (€334 million) over the year to 31 March 2015, compared to £231.1 million (€320 million) over the year to 31 March 2014.

Ian Sayers, Chief Executive, AIC, said: “It’s been a good year for the VCT sector, with strong fundraising for the 2014/15 tax year and funds under management at a record high. As the sector has matured, it is encouraging to see so many VCTs offering consistent and attractive yields. The companies VCTs invest in start small, and as such are high risk, but the tax advantages on offer can be appealing for investors willing to accept the risks. The increase in average dividends paid is one of many reasons why income hungry investors might want to consider VCTs as part of a balanced portfolio.”

The average VCT is currently paying an average yield of 8.2%, with the average generalist VCT yielding 8.8% and the average AIM VCT yielding 5.6%.

The level of aggregate dividends continued to be dominated by generalist VCTs focused on private equity and development capital due to:
• A larger amount of funds being managed by the sector (“asset base”) from which dividends are being paid
• An increase in the number of VCTs seeking to pay annual dividends of circa 5p per share
• A number of VCTs paying “special dividends” (returning realised investment gains) to shareholders

The amount of dividends paid by the AIM focused VCT sector in the year to 31 March 2015 (at £21.7 million / € 30 million) is comparable with the year to 31 March 2014 (at £22.7m / €31.5 million), when taking into account that there is a reduced number of AIM focused VCTs in existence at 31 March 2015 compared with at 31 March 2014.

About Finance Monthly

Universal Media logo
Finance Monthly is a comprehensive website tailored for individuals seeking insights into the world of consumer finance and money management. It offers news, commentary, and in-depth analysis on topics crucial to personal financial management and decision-making. Whether you're interested in budgeting, investing, or understanding market trends, Finance Monthly provides valuable information to help you navigate the financial aspects of everyday life.
© 2024 Finance Monthly - All Rights Reserved.
News Illustration

Get our free monthly FM email

Subscribe to Finance Monthly and Get the Latest Finance News, Opinion and Insight Direct to you every month.
chevron-right-circle linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram