Easy way to choose stocks to invest for long term or SIP.
Choosing the right stocks for good returns over long period of investment is always a herculean task. And in the hindsight, you’ll always wish that you had invested in that one stock that has given a return of more than 1000% in 5 years.
Unless you are lucky, that’s not going to happen. It is best advised that you split your investment amount in different companies across sectors. You may not get spectacular returns like if you had invested in a multibagger stock(which you always know after it becomes a multibagger), but you ensure that your capital is not washed away and most of the times you’ll make decent profits over long periods like 5 to 20 years.
But the question is how do you select the right stocks for investment? Especially, if you have a busy work schedule with little time to do research, you’ll be at mercy of the so called “Financial advisors” and their high fees. You can check John Oliver’s hilarious take on it.
Historically, it has always been the case that staying invested in several good companies has generated significant Return-On-Investment. So, the question is how do you do it? Ho do you select stocks?
An Indian website is used below to give an example for Indian Markets. You can use similar websites for your country to make decisions.
In moneycontrol website, go to the Mutual Funds page. Over there you’ll find list of best performing Mutual funds for different sectors and criteria. Open top 3 or top 5 from each list or the ones you are comfortable with and check the stock holdings for them and the weight allocated to them.
Collate them in an excel sheet, and check which stocks are the funds’ favourites. You could choose to diversify your capital by investing in those good stocks that have been picked by all or majority of the funds.
Do this every month. Keep a track of which new stock is becoming the funds managers’ favourite and which one is being sold out.