Investing in stocks can be challenging, especially during uncertain times when you have no idea what to do. Investing your money should not be complicated if you follow simple strategies to help you make the right decision. While every investment carries a certain amount of risk, investing in stocks provides an annual return of at least 7% after inflation. This makes owning stock an attractive way to invest your money in the long term.

The following are tips a new investor should know when owning stock.

Watching Insider Stock Ownership Changes

As an investor, it would be helpful to know what essential shareholders and company owners are doing. By observing the trading activity of large institutional investors and corporate investors, you will better understand a stock’s potential. While institutional or insider ownership is not an outright buy or sell signal, it provides valuable information when searching for a good investment.

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Insiders are the company’s relatives, directors, officers, or any other person with access to important company information before accessing the data. When you closely monitor what insiders are doing with their shares, you will obtain firsthand knowledge about the company’s prospects before other people. Trading and insider ownership can affect the share price. Due to this, companies must file reports on the issues with the Securities and Exchange Commission (SEC). This provides investors with some information into insider activity.

A higher value in insider ownership means that the insiders have a more significant stake in the company succeeding. For this reason, the insiders will work hard for the company to advance or see a rise in the stock price. Insider stock ownership changes may emanate from the trading of company shares, stock grants, or the exercise of an option. A purchase of shares shows that the insiders have confidence in the future performance of the company.

Benchmarking

It would help if you did not rely on major indexes to compare your portfolios as they appear in the news. Track your portfolio’s performance against a market tracking index as it provides an accurate comparison. The tracking index incorporates the actual costs of owning a portfolio matching that index. Benchmarking lets you establish your portfolio’s relative performance compared to just owning an ETF, which takes the management of your portfolio out of your hands. This will help you understand whether to beat the market or beat the benchmark.

The number of benchmarks has expanded with product innovation. Benchmarks are primarily used as the main factor in the investment industry for portfolio management. Smart-beta funds and passive investment funds are two approaches in benchmark investing.

Passive

Benchmarks are developed to include many securities representing a part of the overall market. The objective of creating passive investment funds was to give investors exposure to a benchmark as it is expensive for one to invest in all the indexes’ securities. When dealing with passive funds, the investment manager utilizes a replication approach to tally with the returns and holdings of the benchmark index. This provides investors with a low-cost fund for intended investing.

Smart-Beta

Smart-beta strategies aim to improve the returns of an investor if they invested in a standard passive fund. This can be achieved by picking stocks considering certain variables or taking short or long positions to obtain alpha.

Annualized Total Performance

An annualized total performance is the annual average amount of money earned by your investment over a certain period. This performance is calculated as a geometric average to show you what you would make over a certain period if compounding is done on the annual return. The annualized total performance only provides a sneak preview of your investment’s performance and does not provide you with an indication of price fluctuations or their volatility.

It is vital to keep track of your annualized performance as it sheds light on how your investments are performing, which will help you make informed decisions instead of impulsive ones. Instead of using labor-intensive or manual ways to track your investment’s performance, use portfolio tracking software, which will provide you with automatic updates, your portfolio’s visualization, and your actual performance.

Every investor should know how their investment is doing at any particular time. The information is useful when deciding on whether to buy more stocks or sell existing ones. Therefore, make use of the tips provided to monitor the performance of your stock.

Auhtor bio: I’m Jaylin: Guest post service planner of Leelija and full time blogger. Favourite things include my camera, traveling,caring my fitness, food and my fashion. Email id: editor@leelija.com