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Stocks are generally bought through stock exchanges but with the introduction of FinTech platforms, stocks be easily bought from the comfort of your homes or offices. They are also called “shares” and they represent an ownership stake of a company by the investor. This makes shareholders owners of a company (partially, related to their stake in the company). The volatility of the stock market makes it risky for investors who do not understand the companies they are investing in. The prices of stocks can rise steeply; the same way they can fall.
This is where MLC comes in for the investors. We help you pick the right stocks and invest in them based on growth or value related to your financial goals, risk appetite and age.
Value and Growth investing are two of the most popular investing strategies around, but how do they compare and what do they entail?
The difference between both is not as fierce as the debate between active and passive investing, but the dichotomy is very important to understand nonetheless, as these are two of the most popular fundamental approaches to investing. They employ opposite criteria for selecting investment, although their goal is the same. They both form a dichotomy in the fundamental school of thought of investing.
Growth investing is one of the most popular styles and it relates to a quick approach to maximizing returns. Value investing on the other hand, adopts a slow and steady approach.
Growth investors are always looking to invest in companies that are growing faster than the market, in a bid to achieve their goal of higher than average earnings. They are focused on finding companies that have high growth rates (particularly small companies). Growth stocks are generally more expensive and have high price-to-earning (P/E) ratios as they believe the stocks will grow rapidly, they are usually bought on the promise that the stock will produce high returns in the future.
Growth stocks tend to be more volatile that value stocks which are more stable
Value investors are more willing to invest in companies that are termed ‘boring’ due to their stability and maturity. They find stocks that are worth far less than their current value and are ready to sit on those stocks even when they’re experiencing a decline until they reach their true value. They are generally termed “bargain hunters” as they try to identify sticks that are currently selling for less than what they’re currently worth after studying them to check for solid fundamentals. The price-to-earning (P/E) ratio is used by value investors to value stocks.
An investor can diversify into growth and value stocks based on what we have detailed in the corporate responsibility section.
Stocks are a major part of any investment portfolio because of their overall stability combined with their good potential for growth. Depending on the type or category of stocks, they are fit for all ages and can be diversified according to the personal goals of the investor. MLC advises her partners to set financial goals based on their financial situation, age, risk appetite, etc. This will help investors understand the level of risk they are able to take.
The psychology of investing is very key in goal setting. Combining this good investment psychology with good education will lead to a strong conviction, and this is one of the most underrated skills an investor can have. Zooming out from the stock market’s ups and down for the past 2 decades will reveal the massive ‘quantum leap’ of stock prices. However, the ups and downs during this time period that brought about huge gains has been relatively volatile. For example, the 2008 global financial and stock market crash saw some stocks loose more than 50% of their value, it has since recovered and gone far higher. This shows that having a strong conviction about the market and understanding your goals and time period where your investment will be needed will educate you on finding better ways to diversify your portfolio and avoid the psychological risk posed by volatility.
Stocks give investors exposure to potential companies that have great futures. Having a wide range of stocks to invest in demands a general knowledge of the market; this is where MLC comes in.
Inflation has been a consistent factor in finance for as long as the term wasn’t even known. The recent Covid-19 pandemic led to record high fiat money printing leading a record high level of inflation I 30 years for the US. European countries like Britain have inflation rates of about 19%. Investing it stocks can protect your funds from inflation.
In spite of the volatility of the stock market, the long term growth potential is almost certain if you diversify properly. This can serve as a way of protecting generational wealth.
Income-producing stocks pay regular interest or dividends
With the recent introduction of FinTech platforms, stocks can be bought on the go
The decision of the company to invest in is under your control
Learn about two main types of stocks, as well as some potential advantages and considerations.
There are majorly two main types of stocks: Common stocks and preferred stocks
Stocks that most companies have. They are generally what people invest in when they buy stocks.
Stocks owned by a small majority of companies. Most of these companies have these stocks in addition to common stocks.
MLC has the sole purpose of making our clients not just financially free, but also psychologically relaxed in the midst of obvious global economic turmoil.
Risk Reminder: Trading foreign exchange and/or contracts for differences on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could sustain a loss in excess of your deposited funds. Before deciding to trade the products offered by Maxloz Capital. You should carefully consider your objectives, financial situation, needs and level of experience. You should be aware of all the risks associated with trading on margin. Maxloz Capital provides general advice that does not consider your objectives, financial situation or needs. The content of this Website must not be construed as personal advice. Maxloz Capital recommends you seek advice from a separate financial advisor.