It seems like almost everyone has caught the investing bug over the last two years.
While it may be challenging to keep up with every minute development in the space, staying up to date on what companies and markets are performing well is essential to build your portfolio continually.
If you’ve gotten into the steady habit of investing, you’ve probably faced the question of where to go next. Like most things in life, there are plenty of factors to consider before putting your money into a new company to invest in.
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What does your current portfolio look like?
Understanding what your current investment portfolio looks like and what it may be lacking is one of the first steps in deciding on new companies to invest in. According to investing business Sharesies, when looking to diversify your portfolio, you might want to consider investing in companies different from those you already have shares in, whether that means they are in a different sector, economy, or other factors.
ETFs are one option for diversifying an investment portfolio as they hold multiple underlying assets, like stocks, commodities or bonds across various sectors, jurisdictions and themes. Diversifying your portfolio based on risk factors and time horizons is another option.
Alternatively, you could double down on a particular strategy (like exclusively investing in one industry) and look for new companies that align with investments you already have shares in.
How is the company currently performing?
There are various ways to assess how a company is currently performing within the market. While one of the most important things to remember is that past success cannot predict future results, there are a few patterns to consider when understanding a company’s trajectory. The market has been trending down since the start of 2022 (due to a variety of reasons like high inflation, interest rate hikes, and of course, geopolitical tensions), which can be nerve-wracking for new investors. Even still, it could be a good time for beginner investors to keep an eye on stocks to start getting across the share market and their options, even if they aren’t ready to take the plunge.
If a company has high volatility (when a share price fluctuates regularly), it’s likely riskier to invest in. And where a company’s share price remains relatively stable, it’s potentially going to be less risky. It may be worth looking into how the news reports on a specific business or industry and how experts in certain fields assess whether a company is going to continue to perform.
It may also be helpful to review how a company is performing against others in its field. Many factors determine this, including its market cap, earnings per share, and dividend yield (all of which you can brush up on here).
Does it align with your values?
Some may say this is the most important factor — after all, you wouldn’t want your money funding something that violates your values entirely. The return on your investment in a company that aligns with your values isn’t just monetary — you may be supporting a business that helps create a future you want to see.
If you’re looking to learn more about the world of investing, you can take a listen to our podcast Unlikely Investors here, and if you’re keen to invest, you can sign up to the Sharesies platform and use promo code “UINVEST” for $10 in your account, ready to invest.
All investing involves risk. T&Cs and fees apply for use of the platform provided by Sharesies Limited. $10 applies to new accounts only. Promotion T&Cs apply and for use of the platform provided by Sharesies Limited. This article is sponsored by Sharesies AU Pty Limited, as an authorised representative of Sanlam Private Wealth Pty Limited (AFSL No. 337927). This is not financial advice and the information provided in this article has been prepared without taking into account your objectives, financial situation or needs. Speak to a licensed financial advisor for advice specific to your circumstances. Image shown does not represent a real portfolio.