Value investing is one approach to investing. This strategy is even used by seasoned investors like Warren Buffett.
The definition of value investing itself is a way of choosing stocks based on the fundamentals that come from annual reports and quarterly reports.
Investors who use this approach usually look for stocks that are reasonably priced. This is because investors are looking for stocks at sloping prices and sell them when the market returns to normal.
What is meant by cheap is not only from the stock price. However, you should also compare the stock’s value with other indicators.
Indicators that can be compared to stock value include the profit and book value of the company.
So, what are the advantages of investing by value investing? The following is an explanation quoted from The Balance.
Advantages of Value Investing
People with small capital can invest
By using this technique, investors with small capital can invest. However, there are things that must be considered, namely investors must be able to read and study the fundamental conditions of a company.
Make use of the Power of Compounding
The definition of compounding is the investment potential to get abundant interest benefits. Compounding is often referred to as a flowering flower.
With this compounding effect, the invested instrument will experience significant growth.
This is due to the effect of increasing share prices and the amount of dividends being distributed.
Has been tested
This strategy is one of the strategies that can provide great returns in investing.
This is because Warren Buffett, the world’s most famous investor, has been using this strategy for many years. This makes him one of the wealthiest people in the world.
Low Risk
By using this strategy, the risk you will face will be smaller and the benefits you will receive can also be maximized.
This strategy is suitable for long-term investment, so that it can be free from the volatility that occurs in the stock market.
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