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Entering the stock market is easy. Buy being a good investor is super difficult. So, the majority of people buy bad stocks and lose money. Eventually, spread the bad impression and demotivates others to be far from the stock market.
So, this is the main reason people are reluctant to invest in stocks. Here, people always start to venture from other people’s advice. If the people give a positive response then they will start venturing out new things.
If we talk about investment in stocks many people give negative comments. But the reality is people can make money in the stock market if they understand the stocks well enough.
Before investing, one should be aware of the types of shares. But, masses will invest in big companies or rising value of the shares, then eventually losses.
There are the best stocks to buy to make high returns. Before choosing a company’s shares, initially one has to understand the types of shares. If one invests in the best stocks to buy then he can make a profit.
In this blog, one can understand different types of stocks. In addition best stock to buy to make a high return.
Best Stocks to Buy
In the stock market, there are shares with high prices and low prices. If we invest in value share one can make good profits otherwise he will be under loss.
This logic is completely wrong. If it was true then many would bag huge profits in the share market.
Investing in the right kind of stocks is vital. So, a good investment can bring good returns. Therefore it is important to learn about the types of best stocks to buy
- Value Stocks
- Growth Stocks
- Penny Stocks
- Cyclical Stocks
- Non-cyclic Stocks
These types of stocks are valuable as the name suggests. Here, in this type of stock, there will be no risk factors. Even one can easily earn profits.
But these stocks are run under low valuations. So, even return is also not high. If the investment is done for the long term then it would be beneficial.
Here, Value stocks are always will be companies of high profile and with huge market capitalization. So, Value stocks have the benefits of having low returns without any huge variation in the share price.
In addition, value stocks will give dividends timely. Dividends are nothing but companies that shares the profits with their shareholders. However, value stocks are those stocks that belong to high-profile companies. So, the big companies have already captured the market and have a high market share with the respective sector.
So, these companies will not utilize much of the profits for the expansion of the business. Instead, the companies will share the dividends with the stakeholders.
But providing dividends is completely left to the company. So, a company with its own will can give.
So, Value stocks are one of the best stocks to buy to make a high return.
Also Read: Mutual Funds investments Basics
Benefits of Dividents
Long-term investments are the best category of investment. Here investors are not eager to make huge profits with a shorter span. Instead, they will wait for a long time and hope to make high returns in the future.
Here, investors invest in the firm by their analysis and understanding of the companies. Even long-term investors have a lot of info about the company’s performance and its financial records.
So, value stocks give dividends and it is beneficial for the stakeholders.
Dividends will have an effective steady income to the stockholders. So, investors will get returns timely.
In value stocks, even though they share market is not in a growth trajectory. But, still, value stocks have decent share prices and provide steady income in the form of dividends.
Growth Stocks: Best Stocks to buy
Growth Stocks will have high valuations. Here the share price increases or decreases rapidly. So, the fluctuation is very high.
In growth stocks, one can make high returns with less time. But here the risk factor is more.
In the share market, many are eager to invest in the best stocks to buy. Here, growth stocks are stocks of growth-stage companies.
Those company’s services or products will be in demand. If the product is making a good response then share price increase and shareholders can make high returns.
One should invest in growth stocks cautiously. If the growing company comes with low quality of services or products, then the market reacts contradictorily.
Investing in growth stocks have two risks
- Can’t predict the return from the shares.
- Share prices can rapidly change
Growth stocks are the best stocks to buy if investors are ready to face risky investments. This might be a tough option to make a high return from the investment perspective.
As the name suggests these types of stocks have small prices and valuations. In Penny stokes there will be no fixed returns. Even these types of stocks have low market valuations.
Usually, penny stocks are mostly from the new and early age startups. Where the company had newly entered into the market.
Penny stocks are helpful for beginners in the stock market. So, these might be the best stocks to buy for them. Because the price of the shares is less than 10 and also there will no massive losses from an investor perspective.
Disadvantage of Penny Stocks
But owning penny stocks is always not a safe move. Here are some disadvantages fo Penny stocks
- High Risks
If anyone invests in penny stocks then the chances of risks are higher. Because Penny stocks are from small companies where the revenue generation is not so high.
So, the companies might be profitable or not. Therefore, investing in those stocks is always taking high risks.
2 Low Liquidity
Penny stocks always do not have more demand in the market. So, even if the share price rises then there will be no more buyers. Then the chances of getting profit will be decreased.
So, low liquidity stocks are not safe to make investments.
3 Removal from Stock Market
Under some circumstances, companies will be delisted from the stock market. Then the investors have to bear the losses.
These types of stocks will follow the market trend. If the share market rises then this stocks price also rises and vice-versa.
Cyclic stocks depend on the GDP of the respective country. Even the economy of the country should be in a good state.
Here in cyclic stocks companies, works under travel and automobile comes. These companies entirely depend on the good status of the country. If the country does well then people will have surplus money to make the purchase and make travel to different countries.
Here, Non-cyclic socks are just contradictory to cyclic stocks. In these stocks, companies deal with food, medicine, tobacco, and alcohol comes.
So, these companies are providing basic needs to the people. Therefore, even if the countries economy is declining but this company’s share price will not decrease. Instead, there will be a gradual increase.
Even Blue Chip stocks come under this category. So, making an investment in non-cyclic stocks can bring good returns.
These are the best stocks to buy to make high returns. So, every investor should do enough research in the company and then invest in the firm.
In this blog, one can get an answer to a question like
- Which are the best stocks to buy?
- What are Value and growth stocks?
- Difference between Cyclic and non-Cyclic stocks