Stock and bond investing require a great deal of knowledge and experience. Stock picking can be very difficult process because there is never a foolproof way to determine what a stock’s price will do in the future. However, by examining numerous factors, an investor may be able to get a better sense of future stock prices than by relying on guesswork.

Picking a stock requires a great deal of analysis. Analysts and advisors pour over a company’s financial statements to study its balance sheet, income statement and cash flow statement. They look at company’s revenues, costs, and profits. They examine its cash levels and debt levels and study financial ratios, such as the debt-to-equity ratio, price-to-earnings ratio (PE Ratio) and earnings per share (EPS), among many others. They then compare all of this information to the company’s peers to see the company’s standing within the industry.

The internet has made investment in stocks, bonds and mutual funds easy like never before. This is because of the proliferation of smartphones in an unprecedented way. The smartphone penetration rate in India reached closed to 71 percent by 2023. Smartphones make it possible for investors to trade in stocks from anywhere, anytime. Every major brokerage house offered a free smartphone app to its customers.

The nice part about trading on the smartphone is that investors have access to information about stocks at the swipe of their finger. With real-time updates on stock movement, they will easily be able to buy and sell from anywhere, on their smartphones.

However, this is not always a good thing. Sometimes, impulsive trading due to information overload leads to losses. When some gullible investors see prices dropping, they might get tempted to sell quickly to avoid any loss. Falling victim to such impulsive investment decisions could do more harm than any benefit and this could lead also to financial ruin.

Like stocks, selection of proper mutual fund scheme is also very essential. The return on mutual funds varies widely for different schemes. Return varies among different mutual funds, too. Based on scheme performance, mutual fund schemes are ranked from 1 star to 5 stars. A very depth and wide knowledge are required to understand the nitty-gritty of mutual fund schemes. Investment in sub-optimal schemes will lead to lower returns for the investor.

For successful investment, impartial and good advice is essential. Like human beings, every investor’s circumstances are different such as risk tolerance, time horizon, return expectations, handling of daily volatility, etc. Proper selection of stocks leads to multi-bagger gains, while sub-optimal stock selection will destroy investor wealth. Most of the time, investors resorting to DIY route lose their hard-earned money. This aspect emphasizes the importance of independent financial advisors, who can analyze the specific situation of each investor and offer customized stock advises to suit his individual needs. We at Wealth Axis Securities provide stock and mutual fund advisory services on fee basis to every retail investor after adequate fundamental analysis.