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There are usually two things that an investor expects from the share of a company in which he/ she plans investments and they are regular dividends and capital appreciation. It is obvious that with proper investment plan and choices, this objective is achievable. There is no need to worry about the uptrend and downtrends in the volatile share market in the case that your approach to investments is well organized. Of course, it can be done very little about the volatility of the market but, keep in mind that you can certainly plan to remain unaffected by the swings in the share prices.

The first thing that should be started with when you are in the process of building the portfolio is that you need to look out for those companies that have a good track record of taking care of their shareholders by paying regular dividends. Incremental growth in dividends every year is further indication that the company is prospering. It should be pointed out that this factor alone is not the pointer to the perfect heath of a company, but this is a vital issue. Bonus shares and right issues can be expected from such companies. The rising rate of dividends acts like the shield of protection against inflation. Here are some things that a proven investments plan has to take care of:

1. There is no doubt that with thousands of shares that are listed in the stock exchanges, making the choice from shares is difficult job to manage. No fool proof method can be devised to accurately predict the growth of a share as several factors interact on the price of a share. You should know that the price movement can not be estimated on speculation. With all that confusion, certain yardsticks will have to be applied before deciding in favor of a particular share and, keep in mind that the analytical components help to a great extent to arrive at conclusions.

2. It is also vital for you to know that the strategy for selection of the shares must be similar to a systematic form of analysis. The target is to boost as more as possible the total return on investment for the holding period that has to be targeted at the time of investing, the risk tolerance levels and others. In fact, the analyst visualizes the way how a share is going to move taking into consideration “long” and “short” positions.

3. It is important for you to understand that various economic sectors and industries will perform differently in varying conditions. Service sector industries perform well even during recession and business cycles have a noticeable effect on the sales of certain companies. So, a business analyst will monitor sectors that show signs of an impending turnaround and advise the prospective investor.

4. Quantitative cumulative value analysis, relates to the past records of earnings, sales, assets, management etc. These are all carefully scrutinized to assess the intrinsic value of a share. You need to compare the price thus arrived to the current market price in order decide whether it is undervalued or overvalued.

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