Ask Yourself These 3 Questions To Make Better Investments

Before you buy stock in any company, ask yourself three questions in order to make a smarter decision.

Do you have a friend telling you where to invest? Maybe your dentist gave you a hot tip?

Blindly investing in a company based on nothing more than a recommendation is not worth your hard-earned money. Granted, if these recommendations are coming from the likes of Warren Buffett or Carl Icahn then, by all means, take the advice. But for the most part, it’s a foolish move not to question where you’re putting your money.

If you really want to make the best choices, ask yourself the following ten questions before you choose to invest.

This question seems simple enough to answer but upon further investigation, you’ll often find a company is a lot more complex than they appear.

Companies usually offer more than one product — sometimes they might even be a conglomerate and offer products across multiple industries. By knowing what exactly is driving the sales of the company, you’ll know what is driving your potential investment results.

This information may cause you to rethink your investment decision. Perhaps you don’t have long-run confidence in their primary sales driver or maybe there’s another company that is managing that sales driver more efficiently?

If you don’t fully understand the ins and outs of the company you’re investing in you could be missing out on far greater long-run potential returns.

You need to make sure that the company you’re investing in aligns with your risk tolerance. A blue-chip stock is going to be a far better fit for your portfolio than a niche start-up if you’re highly risk-averse.

You also have to consider how your investment contributes to your overall portfolio diversity. If you’re considering buying stocks in an AI-focused tech-company but already have investments in a number of other tech companies, you may be over-exposing your portfolio to…

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