How to Select a Stock for Long Term Investment?
If you are looking for a long term investment, first of all choose a company whose product/services people will still be using 10 years from now. Do not buy the stocks of a pen-drive making or a mobile-recharging company. Choose for the companies whose products has been used from a long time and will be used for many years in the future. Ex- Automobile, clothes, soap, toothpaste etx.
Here are the 4 key things that you should look in the company before buying the stock for a long term:
- Do you understand the business? You cannot estimate how much the company will be worth or earning in the next 5–10 years if you do not understand the business.
- Does the company has a big MOAT: The company needs to have a big moat or it won’t be able to sustain long term growth growth through all sorts of economic ups and downs.
- Does the company has an efficient management? Do not forget to check the vision and mission statement of the company. If the management is honest, hard working and passionate with big goals, then you can expect hearing some good long term plans.
- Are you buying at a margin of safety? Always have a margin of safety before buying a stock. It’s not a good stock anymore if you over-pay for it.
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I hope the post is useful to the readers.
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