Questions Older Adults Should Ask Before They Buy A Stock

Questions Older Adults Should Ask Before They Buy A Stock

It seems obvious that you every investor should do his or her research investing their savings on any company’s stock. Unfortunately, older adults don’t. Weighing stock-investment decisions is one of the secrets to succeeding in stock investment.

Of course, carefree investing is a style that works sometimes, but not all the time. As a matter of fact, its success normally ends abruptly. This is what stock market crashes have actually taught us. With this in mind, read through some of the most important questions you should always ask before you buy a stock.

What exactly does that company do?

As a senior citizen, your savings is all you have, and you need it to live comfortably as you age. So, investing your money in something you do not understand is just being careless with your savings. So, understand what the company is actually doing before buying stock from it. You can find answers by looking at the website of the company.

Does the company make profit?

This is one of the simplest questions, but the one that is not easy to understand because very many variations on the earnings of a company make it more complicated. You can read both the annual and quarterly earnings reports and find out exactly how much the company reported as their net income, in per-share earnings and in currency.

Who are the competitors of the company?

Every company has competitors, and no one operates in a vacuum. Companies are always trying to grab business from each other. As an investor, you should know what position your company takes in the industry. Does it a small company that is growing rapidly in a very competitive industry? Is it a company with a big market share? Is the industry dominated only by one company? Or is it a highly competitive industry whereby even the biggest players control only 10 percent or less? Buy stock only from a company that is more likely to stand the competition.

How clean is the balance sheet of the company?

If you are a serious investor, and you are planning to be a long-term investor, then you should read the balance sheet of a company from which you are considering to buy stock. Does the company’s debt exceed what it earns? Don’t check the company’s earning s alone because it might have borrowed a lot of money to achieve such earnings. Buy stock from a company whose balance sheet is clean.