Investing in the stock market is not about getting an absolute return. Your financial situation, your investment goal, and your risk appetite will determine what type of stocks and what type of return that suits you the most. Here are a few questions you should ask yourself before deciding what type of stocks you should pick.
Do you expect to start withdrawing money from your investment in the next 3 years?
Do you need the dividend from the investment as your major source of income
Is stock price increasing important for you?
Do you have basic knowledge of investing
Can you accept any loss in your investment
Do you know what to do if your investment drops 20% below your buying price
Do you mind holding a stock trading undervalue for 3-5 years before the market realized this gem
Do you understand what is a value trap
Do you mind buying a stock with growth potential at a high price (Do aware that expansion plan could not work as planned and stock trading at sky-high could be disastrous for investors)
This serves as a guide for investors who are new to the market.
