6 Hallmarks of a Promising Investment

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Luckily, there are a number of ways you can identify good investments and make lucrative financial decisions. According to CNN Money, only 54 percent of Americans invest in stocks, but you can join the leagues of investors by understanding how to identify good investments. 

Reputation of the Company

One of the first factors you should consider when you are investing in a stock is what kind of reputation the company has. Is the owner in the news often? Do they get good press? Consider, for example, the reputation of entrepreneurs such as Chris Sacca. As a major shareholder in Uber, Sacca has elevated the company to international status and revolutionized its industry. Investors are understandably drawn to this, and you should similarly look for a company with reputable shareholders. Chris Sacca has made Uber one of the most bankable investments through innovation and reputation.

Tried and True Stability

Many stocks enter the market with a big splash and decline in value quickly once the novelty has worn off. This is especially true when it comes to tech products and other industries that evolve quickly. It can be difficult to keep up with the changes, and it can be difficult for stocks to retain their value—much less appreciate. Look for an investment that is tried and true. In other words, invest in a company that has a track record of consistent profit and favorable returns for investors. This will likely have better results than a flashy-but-unstable investment.

Product is In-Demand

It is common sense that you should invest in items that are in-demand. What consumers want today may be completely different than what they want tomorrow, though. It is difficult to predict market trends even for the experts, so novice investors should not try to make any risky investments in hopes of a massive payout. Instead, stick to products that will always be in demand. What products to consumers need that you can invest in? If you are looking at stocks for a product that people need, this is a sign that it will offer a promising return.

Price is Historically Low

At any given moment, you can find stocks that are at remarkably low prices. Getting a bargain on a high-value stock is a great move, but you can also get some great returns on stocks that boast historically low prices. The less you invest, the lower your risk of loss is. As a beginner, then, you should consider finding stocks that are typically at the lower end of the price spectrum and include these in your portfolio. A low price can be indicative of a promising return, but you should always do your research before investing.

Shareholders Are a Priority

When you buy stocks, you are doing more than just making a passive investment in pursuit of a financial return. You are become a participant in a company and laying stake to its outcome. Of course, unless you are a majority shareholder, it is unlikely that you will have the power to make any major decisions, but you should look for stocks in companies that treat all shareholders as though they are valued. This is a surefire sign that the stock is a good investment, and a company that prioritizes its shareholders is likely to be profitable, too.

The Outlook Is on the Rise

At the end of the day, reviewing advice from experts is usually a good idea. Stock specialists are the most reliable predictors of which investments will be profitable and which won’t. Listen to experts and consider investing in the stocks that are projected to have a favorable outcome. If financial commentators unanimously project the outlook of a particular stock to be on the rise, this is a good sign that it is a worthwhile investment. Financial advisors will know the ins and outs of a stock and its company, so their advice is a valuable resource.

Consider all of these criteria together when you are looking at jumpstarting your investment career and reeling in great returns. Everybody’s portfolio is different, but any stock with these characteristics is likely to be an asset to hold on to. Beginner and veteran investors alike can learn from these tips and choose better stocks by keeping the aforementioned criteria in mind.


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