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Why you should only invest in the best shares to buy at the right price

by , 16 July 2015

Finding the best shares to buy is half the battle when it comes to investing. If you end up paying too much for great shares, your investment will suffer as a result.

So how can you buy the best shares at the best price?

Read on to find out…

How to find the best shares to buy

When you invest, the first thing you need to do is find the best shares to buy.

There are a number of criteria that indicate a great company to invest in, Mike Barrett in Daily Wealth explains:

  • Plenty of free cash flow;
  • The payment of dividends to shareholders;
  • Strong balance sheets;
  • Consistent profit margins; and
  • High returns on equity.

If you find shares that meet this criteria, you’re halfway to making a good investment.

The price you pay for shares is crucial

The next thing you need to do is buy in at the right price. You don’t want to pay too much. You need to wait until a company is trading at a cheap price.

This requires discipline and patience, but the long-term rewards are worth it.

There’s a simple reason for waiting for shares to drop to a cheap price. The lower the price, the better your future returns can be.

If you find a fantastic business, it’s only a great long-term investment if you buy it when it’s cheap. Pay too much and your investment will underperform and you actually risk losing money.

That’s why you need to take your time with share picks.

Be patient and the prices of stocks in great companies will dip every now and then. Add these shares to your watch list and wait for the price to come down.

Over the long run, you’ll be glad you did.

So there you have it. Why you should only invest in the best shares to buy at the right price.

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Why you should only invest in the best shares to buy at the right price
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