5 important steps to earn from stock markets

Create a great portfolio (invest in a number of stocks) that will balance your needs such as income, growth, safety, long term stability and long term objectives.

Balance your portfolio with

1.      High dividend yield stocks, which will give you regular stream of income every year from equities. This will never let you feel that profits from stock market are only in the books.

2.      Sustainable and visible earnings growth in the stocks, which will increase the value of your portfolio. This will make sure that your portfolio is not just earning some bucks every year through dividends but its value is also growing.

3.      Focus on good return on equity companies (ROE) which will provide you required margin of safety. Margin of safety ensures your stock never falls much as compared to the stock markets. It's your protection to weak economic scenario.

4.      Track record of low leverage (debt to equity) companies which will ensure you that your portfolio will sustain over a long term. While high financial leverage is not always bad, many times it shows over aggressive intent of managements which makes your portfolio vulnerable to stock market shocks and cracks the idea of long term stability to your investment.

5.      Growing operating cash flows companies over the years or every year which will ensure your stocks are in the hands of able management which will fulfill your long term objectives.