5 Factors to Consider Before You Invest in Stocks

by Andrew McGuinness     Jul 16, 2019

Not everyone who invests in stocks or who is looking to invest in the stock market is aware of what to look for in a company. A lot of people try their luck, much like gambling. If you were to gamble on anything, however, why not put in a little research in order to know a bit more about how your money might grow for you?

it’s not as fun as throwing money around recklessly and relying purlely on luck. But, come to think of it, a great majority of us are not lucky, we do not win things on a daily basis, we are less likely to succeed when we rely on luck rather than taking action. For this reason, it is time to take your life and money into your own hands and be thoughtful about your options before investing in just any stock. The following are five factors that are absolutely necessary to consider before making any investment in the stock market.

1.Stable position in the market

Before investing in anything, it is essential to consider the factor of stability. Especially if you are new to investing, do not have much experience within the field, or if it is your very first investment, you need to find something stable that is seemingly guaranteed either to grow or remain consistent.

2.Company management

Who the company is managed by, as well as how it is managed, is also important to look into and consider. In order to do so, you can check the company website (any company worth your investment should have a website) and look into the list of senior managers.

There should be a page outlining their experience with the company, what their position requires from them, as well as their job history and background. Researching into the company’s executives by looking into what they are doing for the company as well as what they have done in the past is a must. Trade publications would also be beneficial to look at.


In order to properly analyze the status and position of any given company, it is important to take a look at how they fare among companies that are related and therefore provide them with competition. If they are on the lower end of the spectrum in comparison to their competition, it would obviously not be advised to make an investment. However, if it is small but showing promise, you may want to give it a second glance. One last thing to note is that, when considering competition, it is important to look into foreign companies as well as domestic.

4.Company’s balance sheet

If you are really serious about investing and would like to invest a substantial amount of money, the safest bet would involve taking a look at the company’s balance sheet. A balance sheet includes information such as company debt, liquidity levels, inventory levels, earnings, assets, equity, and net margins.

By having access to all of this information, you will be able to analyze how valuable the company actually is on paper and not just on the market. If a company is gaining plenty of earnings, for example, but has even more debt, this would obviously hinder the likelihood of you investing.

5.Basic information

It is important to consider basic information about a company before making the commitment to invest. This information includes, first and foremost, what the company actually does. Is it something unique and innovative that society may benefit from, or is it just another replica of a widely expanding company with very little added effort? This will allow you to have a better understanding of whether the company is worth an investment from you.

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