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Stock Market and You

LESSON  4:

Let us consider a Company which manufactures  products which we  use  daily: products such as bath soap, toothpaste, cosmetics,  tea,  and a host of such items.  Since these products are used regularly, people necessarily have to buy them regularly.  In other words,  Companies  which manufacture such items earn regular profits.  Also,  prices  of these  items  go up steadily.  This means,  sales  turnover of such companies  increase continuously,  which in turn results in increased profits for them.  And, yes, you’ve guessed  rightly!   If you invest in such companies,  your investment will grow.

Now  obviously  there are many companies which manufacture  each of these products. Which means, you have to decide which company you have to invest in.  Common sense tells us that the right choice will be that company which fetches us the highest return.  It could be by way of growth or by way of dividends.  And there are different parameters to look at it from.  Sometimes, the Government may allow import of such products;  or it may increase taxes.  The company may be forced to declare a lock-out due to strike by its workers. 

 Are you getting confused here?

To make your choice easier,  invest  in blue chip companies.


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