Investing in Stock Market while studying for higher education is a great way to earn extra cash to save for future or to cover your education expenses. If you think you’re too young to invest, or that you don’t have enough money, think again. Because online investing has made the process so simple and accessible that almost anyone can do it starting with small amount of funds. However, you should be responsible and disciplined, because sometimes the potential risk involved is generally greater than the returns.
Step 1 – Study the Basics:
First learn basics of stock market trading. There are various online guides on investing. Basic information on Colombo Stock Exchange can be gathered from CSE web site. http://www.cse.lk/. You can also follow a course conducted by CSE or participate in open days conduced by them.
Step 2 – Practice online simulation game without real money
Before investing real money it is a good idea to practice online simulation game on stock marketing (paper trading). Stock market simulations allow students a valuable and fun opportunity to learn all about the process of making good investments and begins a good foundation for sound money management.
VstoX is a good free online stock market investment simulation game game based on Colombo Stock (CSE) Market in Sri Lanka. It does not require actual financial investment or formal registration with stock brokers etc.
Step 3 – Select great businesses to invest and learn when to buy and when to sell
Selecting best stocks for investment is not a simple procedure. We will have to study and analyse few facts before we invest in stocks.
The Colombo Stock Exchange (CSE) has 287 companies representing 20 business sectors as at 09th October 2012, with a Market Capitalization of Rs. 2,234.2 Bn. http://www.cse.lk/list_by_sector.do
Selecting a best available stocks (Company) to invest, involves analysis of data. Following criteria will help you in selecting stocks.
* Earnings Per Share (EPS) and PE Ratio
* Book Value Per Share (BVPS)
* Profit Margin (Divide the Net Profit with Revenue)
* Return on Capital Employed and Return on Equity (ROE)
* Dividend History
* Profit Growth
* Cash Flow Details
* Business Segment and Growth Potential
* Size of the Company
* Competitive Advantage In the Market
* Brand Value and Product Differentiation
* Economic Atmosphere of the Place of Main Operation of the Company
* Political Influential Factors of the Country
These data are available on company web sites, your stock brokers site or financial website such as Bloomberg http://www.bloomberg.com/quote/CSEALL:IND Financial sites such as Google Finance, Yahoo Finance and MSN Money are great sites to get financial data, however they do not have data on Colombo Stock Exchange.
Bloomberg, an excellent authoritative site on global financial data, provides price, stock chart, company news, key statistics, company profile and other data on Sri Lankan companines. You can type company symbol followed by :SL to check data on a Sri Lankan listed company. For example if you type COMB:SL in the search box of Bloomberg site you will get details of Commercial Bank of Ceylon http://www.bloomberg.com/quote/COMB:SL.
Step 4 – Start online brokerage account and start trading stocks
When you have studied the basics, now it is the time to set up an online brokers account with one of the Sri Lankan stock brokers. Then you can start buying stocks. Focus on trading activities daily, it has lot of action, and changes throughout the day. The stock market will go up and down. So invest wisely.
Colombo Stock Exchange Education also contains more learning resources http://www.cse.lk/cse_education.do
Download Basic Guide to Investing in Shares published by CSE http://www.cse.lk/pdf/CSE_Guide_Book_English.pdf