Before investing in any business, people must always look at the cost benefit analysis to figure out how long it will take before they start earning returns from the investment. Any sound investment plan seeks to maximize on returns gained from it. When investing in shares it is essential to look at the value of the company a person intends to buy shares from and the probability of growth.
Using the history of Microsoft stock as a case study, if a client decided to invest in the company thirty years ago they could be among the richest people in the world right now owning a considerable amount of shares of the company. The period between the years 1987 to the year 1999 was the most opportune time to buy Microsoft shares. this is attributed to the upward trend in their values as time progressed. Their value was always rising. Therefore, a client must always look for a company whose value is rising consistently as it has a higher probability of growth.
However, during the years 2000 and 2002 the company’s share value dropped because its growth prospects had gone down drastically. in the year 2003, Microsoft started rewarding its shareholders who had invested in them in the form of dividends thus showing business maturity. The shareholders were rewarded handsomely with dividend rates going past 10% in several occasions throughout the time period. The fact that Microsoft has maintained good relationships with its shareholders through dividends made it bounce back to lead the market. Therefore, a client should also choose a company that rewards its shareholders handsomely through dividends.
From the history of Microsoft stock, a number of factors are derived that clients must consider before investing on the stock markets. One of the major factors is the value of shares in the current market. Clients should always consider shares whose value is considerably low but has a high probability to rise with time. Shares with high values in the market have a high probability of falling rather than of rising.
It is also important for investors to realize that the stock market is a long term investment. This means that returns accrued from this kind of investment are seen in the future. However, returns are only guaranteed if the value of the company and its shares’ value increases in the market. Therefore, clients really need to look at the probability of a company to grow in the market to command a large market share. This is the most important aspect in share market investment.