Choose Stocks Wisely: A Formula That Produced Amazing Returns

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Now, l et us summarize the 8 steps with questions to be answered to select a stock to invest in Indian stock market :. I hope you have understood all the steps and questions to be answered before you select a stock to invest in Indian stock market. Let me know what you think about this procedure in the comment box below.

In addition, if you have any doubts regarding any point mentioned in this article, then feel free to comment below. I will be happy to help you out. New to stocks? Confused where to start? The course is currently available at a discount. And so, I am delighted to share my learnings with you. Thanks Shiv. Sure, implement the gudelines to select a stock and you will definitely get decent returns.

Extremely good article regarding stock investment, I am very much impressed and thank you very much for your very useful guidance for long term investment. Thank you Sir for sharing such a valuable post on this topic. Its help the investor, Trader and also help the marketer. Thanks again for your nice post! Thank you. I have studied a number of best-selling books on stock market and the above post is summary of what I learnt.

Book marked the answer and noted it. Followed you and put notifications on. Amongst the most detailed answers seen and painstakingly explained. Very nice article,,? Hi Arun. Thanks for the comment. Yes, there are a number of people who invest for short-term or Intraday and make huge fortunes from it. You can invest also invest for short term. Personally, I follow long-term approach. Hi, This is very good article and very well designed with examples.

Basically the problem comes that where to get all this information. Can u suggest any good analysis tool or site. I know there are few site like moneycontrol that can give ratios but there are many stocks, which one to hit may come only when the data for all available at one place. A very good to understand the fundamental to take care while investment and excellent for new investors. You can find list of some good investing books here. Such a great and easy to understand article. Thanks Kritesh sir. I have included this site into my bookmarks list. Good Article.

And as per 8 fields Is it that both stocks are not good fundamentally? I have read almost all the articles on tradebrains related to my queries, and i am pretty satisfied. Please advise on how do we identify a likely bonus candidate. Very elaborate and deep criteria are given. I used free screener to locate stocks accordingly,based on first 7 norms. Also I could put a query only for 3 yrs EPS.

However not a single stock popped up. It appears the norms are stringent. Could you respond? I attempted on 06,06, Hi Shalini. Yes, the criteria are a little conservative. They help in selecting stocks based on all prospects like valuation, profitability, and liquidity. Anyways, you can modify the criterias according to your strategy. The article is really helpful and I believe I have read a culmination of good thoughts by investor stalwarts such as Warren Buffet, Peter Lynch, and Joel Greenblatt.

Out of curiosity, would you mind sharing how did you start your learning about investing and how did you put together this list. Thanks again for the good work. Really appreciate it! Hi Himanshu. Thank you for your kind words and you are gladly welcome. Really good article Kritesh, would you please share the sources to gather all these data listed in the article. Hi Sandesh. You have to refer multiple sources to gather these datas.

Quantitative data can be gathered from the financial websites. But for qualitative data, you have to do regress research. Hi Vagi. You can get these ratios on financial websites like moneycontrol, screener, investing, equitymaster etc. Great articles.

I am reading every article and every article is explained in detail. Thanks a lot Kritesh. Hi kritesh the above information was really helpful. Can you explain with an example? Are earnings, income and profit the same? Hi Atish. Why so? Kindly reply Thank you. So Nice Sir… I am a beginner in stock market, and your suggestion is very helpful for me.

I love the way you write this content. The way you write it is very eye-catching it was honored to read this post. Keep it up and keep post this type of blog regular on your website. Also if you want any type of business information related to the stock market such as if you want to Compare Demat Account charges In India then you can go to our website. Also for more information, you can contact us through this number anytime. Thank you very much.

All the facts explained by you are very simple and easy. Investing in Stock market. Your email address will not be published. June 3, Kritesh Abhishek Investment Basics. Kritesh Abhishek. Tags: how to choose stocks for long term investment in india how to identify good stocks india how to pick good stocks in indian market how to pick stocks for long term in india how to select a stock to invest how to select a stock to invest in india. Shiv Kumar says:. June 15, at pm. Kritesh says:. T S Venkatesh says:.

June 19, at pm. June 20, at am. Aman says:. June 29, at pm. Janifar says:. July 3, at am. Sanju says:. July 10, at am. July 10, at pm. Pradeep kumar says:. July 12, at pm. July 13, at am. Raj says:.

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June 21, at am. Shaybaz Khan says:. July 14, at pm. July 18, at pm. I wish I could get a rental for k that rents for Thank you so much for the clear articles on real estate investing. It really made things click for me. This way, you can move out, replace yourself, and the numbers stay the same. I could write an entire chapter in a book answering that question. If one house is vacant, you still collect rental income from the other 4 houses. On the other hand, 5 houses means 5 leases, 5 sets of tenants, 5 turnovers, 5 roofs, 5 lawns, 5 gutters, 5 insurance plans, 5 tax bills, 5 kitchens … you get the idea.

Put each property into an LLC. If your state allows it, look into a series LLC. Never work on your own property.

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Guess who is liable? You are. Great read btw! I would love to know your thoughts on buying for cash flow vs buying for appreciation. What do you think? And do you have any tool suggestions to analyze property deals? Thia is a great analysis that has me excited about rental real estate again. Amazing where a click or two will take you! Hi there! Someone iin my Facebook group shared this site with us so I came to give it a look. Outstanding blog and terrific style and design. I am definitely interested in investing in the real estate market for rental income.

I live in Whittier, California. Now, I have a question to run by you. We currently have a 3 bed 2 bath home, which we were initially going to sell. We were approached by my mother in law, asking if she could rent it instead. This is not a discussion whether or not to rent to family. The thing is, we need some money for a downpayment on our new home. We also have a 12k home improvement loan.

Thank you Paula so much for your feedback! Great article! How about ? You cannot make a statement like If your investments drop early within the investment, your recovery time can diminish overall returns. Similarly, if the market drops shortly before you sell, before the recovery begins, this timing can also diminish overall returns. I actually forgot the exact relevant period — again, my bad.

We can use a period as early as , though arguably we may or may not want to narrow the years to those whose economic policies and realities were more similar to those of today. Again, that may be a good dataset if we think post-Great Depression years are significantly more similar to how our current economy functions, or a bad dataset if we think the GD can easily happen again and want that historical data included. Regarding the studies you read — the most common cause for people inaccurately citing too-low statistics is not including dividends.

The most common cause for people inaccurately citing too-high statistics is using an arithmetic average instead of geometric average. This figure includes dividends; however, it subtracts some return for taxes and fees. I would not have subtracted those values if I had created this graph, given that taxes and fees vary widely based on the individual.

I disagree with that aspect of the way in which they reported this data. Also, to properly compare apples-to-apples, this data really ought to show the returns without adjusting for inflation. How would you respond to this? Finally, thank you for contributing to this conversation. I appreciate you! I also wish such articles would make it easier for us to compare apples to apples. Generally, returns are presented without inflation, taxes and fees, which make the raw returns so much easier to compare between opportunities. In terms of how I interpret that data, I agree with your analysis for the most part.

That period — seems to have had an average annual inflation rate of about 3. About as bad as not going the tax-advantaged route is when people use high-fee instruments or worse, active management. Yet, fees are probably non-negligible. That leaves us with a reverse engineered 9. By the way, I see this as a bit of worlds colliding.

I see you as on the level as those experts, except in real estate. And there are other approaches too. When these worlds collide, it helps people to broaden their toolset for achieving FI, since they all can play a powerful role. The pre-tax amount, in this scenario, would be 8. In other words, the most-conservative-scenario would be a long-term-annualized return of 8.

Which means I need to edit that sentence in the article. Thank you for raising this. Have you thought about starting a blog? I think a lot of people would benefit from it. Exactly — those bloggers have brilliant ideas that sound obvious in retrospect! And yet I see so many friends just coast along without some basic financial concepts.

But seeing so many friends defaulting to average financial outcomes compelled me to write articles on this in the first place. But your really generous words and advice may be a better approach. I still am hesitant from some sort of inferiority complex compared to you guys. But I am confident I do have thoughts and ideas to share, so I suppose I should put my thoughts in a more public, permanent and respectable-looking venue. We all start somewhere. When you are ready, do a little more.

Then a little more the next day. And so on. There are no overnight successes- just people who take consistent little actions that add up over time. Leveraging is really not a bad thing especially if the interest rate is less than the cap rate. You borrow money to make more money :!! This was a very clear and concise post, loved reading it. Especially the section on cash-on-cash and over-leveraging. A refreshing perspective in a world of high-risk investors.

Thanks Paula. Also, thanks for writing a blog of such phenomenal quality! You mentioned there are two ways a rental makes money appreciation and cash flow. What about depreciation for taxes and value in relation to the amount of the principle you pay off every year.

Great article. I am looking at getting 2 properties in the same condo building. We plan to Airbnb one full time, and are trying to decide what to do with the other one, which we plan to live in. The one airbnb will cover both mortgages, but not much more. I work full time, wife runs a charity, but can work from home as needed. We plan to start out doing the flips ourself, then slowly integrate a team to handle it. Where do you consider HOA fee for condos and townhouses etc? Is it included in the 1 percent calculation, also do you consider it towards operating overhead when calculation Cap Rate?

Thank you for sharing. A great post! Buying foreclosed houses in cash! Problem is property prices. I saw a house in an up in coming neighborhood that would have been great to update and rent…. But that would just barely only cover costs mortgage and tax. So I passed. Its been 3 months and it still hasnt rented!! Which tells me I was smart to pass but also depressing because how the hell is one supposed to get into real estate rentals like this??

All that to say…. Is it impossible to get into the rental game?


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Hi Paula! What should I do with the money while I look for the property? Schwab has suggested CDs since they are safe but also low yield. Currently I own 1 property free and clear and 3 single family rentals which I picked up in the past 12 month. Currently I have the options to pick up a turn key single fmaily or I can pick up one a couple different duplexes. One is Class B one is Class C. I do have a question. I understand why you separate the financing from the asset when determining whether or not to make a move on a property.

What if the financing is part of the reason for buying the property though? However the house belongs to my mother. There is about 70k left on the mortgage and she has about 60k in equity, the other 10k would be for remodeling. We agreed that I could take over the mortgage and buy her out of the rest no interest. The 70k left on the mortgage is financed at 4. Wonderful blog and it is very inspiring. I also keep in mind my rate of return.

The cost of homes on the East Side of town are overpriced but rent quickly. The homes on the West side of town are newer, better priced, but rent for less. Cash purchases make better deals but that is out of the budget at the moment. I work full time and would prefer to purchase a home with minor repairs than a complete fixer upper. Are there any recommendations when it comes to purchasing rental properties in an inflated market such as the one I am in?

I continue to keep my eyes open for good deals. Also in Abq! Any luck? I live in Verona, WI suburb of Madison and houses are flying off the market for k and our renting for Where in the world do you find properties for k including acquisition costs that gross 1k monthly rental income? Additionally, how would you be able to command more rent in more risky neighborhoods? Lower income areas will not pay more for rent.

Heck, I even own a property in Utah which is a less expensive market and could only get to. Hi Paula, I love your podcast, blogs, and the ease by which you explain things; great article by the way. I was wondering why you have not Invested in Multifamily or have You? Would you consider partnering up on a deals as a way to Close more deals?

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Thank you for your time, Sincerely, Carlos D. Paula: Loved this post, its been very helpful in us penciling out a new prospective investment. We own and operate a small new 4 duplex adult 55plus community. We have an opportunity to expand our complex with building 2 more triplex units. I will have to finance one of the triplex units plus pay for some infrastructure costs to the property. This blog is looking great! The cash-on-cash return formula is wonderful. Those are excellent points.

In the One Percent Rule, when you say purchase price, you are refering to the the upfront cost downpayment, legal fees, stamp duty fees, repair cost and et or the sales and purchase price of the house? I love financing! In my country we can get 50 year mortgages, as long as, your age plus the mortgage term is not higher than This means a 25 year old can have a 50 year mortgage while a 30 year old can only have a 45 year mortgage at most. As you can guess, 50 year mortgages rock in my opinion! The cashflow they provide is ridiculous which enables you to either paydown the mortgage — but why especially if price of money is cheap, which it is nowadays — or to accumulate other properties.

My personal example, I bought 5 years ago, a few properties… these houses are made of concrete and stone and maintenance is not as adamant as US houses. It all depends on the context. I dont mind at all paying mortgage for these 50 years and have a big positive cash flow in the meantime. Which i can use it to paydown, reinvest in other stuff and wait to pay off the mortgages if I so wish or if interest rates go up …. I live frugally so all the cashflow generated by those properties were reinvested in stock market which has been behaving handsomely ….

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Another good thing of keeping the mortgage payment low is due to DTI. We would be laughed out of the market. Which again is considered fairly expensive. It is not like that in the states — I wonder how any of the homeowners are making any money — unless it is just an accepted issued there. Do the renters have to pay insurance or more items like that there?

It could be different in very pricey cities though. UK numbers are similar to Australia. In the UK you pay around There is no commission payment when you buy. There is capital gains tax on the gain when you sell if it is not your primary residence. I have a question for you. I hope you get an answer to this question as mine is basically the same.

Trying to determine right now whether to sell. Warren Buffet talks about this when he talks investing, return on investment. Whether you are looking to invest in stocks or real estate it is all the same essentially, it is about return on investment. Paula, you get it and are helping a lot of other people get it. Thanks for pointing out that we should make sure the monthly rent is at least one percent of the purchase price. My husband and I are thinking about investing in rental properties, but neither of us are very experienced.

OMG — I just learned more about investing in real estate reading this one article than 20 podcasts from a big RE podcast — Thank you, thank you! We only have 1 property currently and we got a great deal, remodeled, and the returns have been great beach rental property. Paid cash. Can you give one real example? Hi Erman — I understand the one percent rule sounds unrealistic in high cost of living areas and often is.

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Paula encourages people to look out of state to find cheaper properties that will meet the one percent rule. Thanks for highlighting different aspects which needs to be taken into consideration while buying a rental property. Buying a rental property is considered as one of the most profitable ways of investment as it assures steady cash flow to the investor.

However, certain factors should be taken into consideration prior to making any decision. One of the most important aspect which should be taken into consideration is the location of the property. That would mean that in less than ten years you could pay off the cost of the building just with the income it generates. I would think that would be a good way to have some income for retirement if you do it early enough.

I thought it was interesting when you said that the monthly rent for a home should start by equaling one percent of the purchase price. My father has been thinking about buying a property and renting it out for some extra money. It would be great if he could find a company that can help him determine which house would fit into his particular needs.

Your email address will not be published. Build wealth and live on your terms. Enjoy FREE updates about real estate, investing, ditching your 9-to-5 job and financial freedom. Zero spam, we pinky-promise. Get a FREE pdf of this post sent right to your inbox. Forget fancy-pants calculus. The most important math is the stuff you learned in fourth grade. How do you know if an income property rental property is a good investment? Click here to Grab a free pdf of this post.

Earn more! Travel the world for free. Pin 4K. Share Include Me. Want More Helpful Stuff? What if We Quit Setting Goals? The Incredible Power of 10x Thinking. The Results are Embarrassing. How Much is Enough? This is a fantastic write-up! DollarDisciple — Thanks! Haha, love the real estate humor! To breakdown my 1st rental property. This extra time causes more 2 — The selection criteria for someone to get on section 8 is actually pretty tight. I do plan to get back into real estate though. Thanks Dale! My advice to anyone who wants to pursue Section 8 renting is the following: Make it your niche.

Nice article! Wonderful Article. I love the break down process. Thanks Paula for the wonderful article. Is the umbrella policy inder your llc? Or is it personal? I would also like to know about this. Thanks again for a great new perspective on gauging these investments! Sam- I agree with you. Love the website and love Ms. Manny — Then look for houses away from downtown cores. Go where the good deals are. I believe that Australians are in the same boat. Are you sure? You need to go to them. Great question, John. Love your blog — I have been glued to it for the past week.

Thanks for all the sharing. Hello, these rules applied to Europe i. Congrats on your awesome success! Love the website! Yes, I completely agree! Great post on how to work the numbers on a deal! Enjoying the blog, thanks for sharing! Simple math goes a long way, thanks for the bottom line. Loved it.!

Choose Stocks Wisely: A Formula That Produced Amazing Returns by Paul W. Allen

John, Great question. Hi Paula, Thank you kindly for your detailed response. Am I missing something? Can you clarify? Regrads, Bruce. What would you recommend as an asset protection strategy? This is not a discussion whether or not to rent to family The thing is, we need some money for a downpayment on our new home.

What are your thoughts?! You make an excellent case. Thank you!! That means a lot, especially coming from you! You have convinced me.

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