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What do I need to know before investing in a new company?

No one in my family has EVER invested money. We save. I was always taught it was a gamble, and "If it seems too good to be true, it probably is". Someone close to me has recently invested money into a new company, and got a LARGE return in just one month. My husband is now wanting to invest as much money as we can also. What would I even need to know before investing any money? Please, no technical terms, like I said, I've never invested.

Public Comments

1. Dont invest more than you can afford to lose. If they have had a huge return depending on how big its been they could be in small cap also known as oenny stocks which are very risky and you could lose alot if not all. Also if its went up alot latley i could be in need of a correction were the price would pu;; back. Hope this helps a little.
2. first of all invest only some portion of your income in shares. you should diverisfy your investment ie in bank FD, public provident fund,postal scheme, NPS, shares and mutual funds. don't invest so much in one time. increase investment gradually. read business news through economics times or magazines. watch business news channel. invest only when you have through knowledge when you know what are you going to do what whould be its result. more over do use yahoo answers facility for getting any type of knowledge. inspite of investing heavy amount in starting first invest small amount and learn various pros and cons of investing in shares. I hope it will help you. All the best for investing.
3. earning per share track record of the company P/E ratio
4. STOCK SELECTION: As always, you will need to do research before you take a plunge. So do your research and select the stocks you want to invest in. CLEARANCE FROM YOUR BANK: Contact your bank with the list of stock you are intending to invest in and your bank will clear you for trading/investing in those stocks. (As per Indian rules, NRIs can not collectively acquire more than 24%, 40% or X % of the paid up capital of an Indian company. So RBI maintains the current levels of NRI holding in various companies thro the designated branches. After you give your list to your banker, she would check her lists and make sure there is room in individual companies for NRIs to invest. If the limit is exceeded, you might not be able to invest in those stocks. So make sure you get prior clearance about your investments from your banker.) PLACE TRADES THROUGH STOCK BROKER: Place your order(s) with your stock broker. With many stock brokers, you an place now online orders. Thanks to Internet, this step is much easier now. FORWARD COPY OF TRADE CONFIRMATION TO YOUR BANK. After you order is confirmed, forward a copy of the TRADE CONFIRMATION to your bank PAY TO YOUR BROKER FOR PURCHASES AND TELL HIM ABOUT YOUR DEMAT ACCOUNT: Write a check out of your NRE/NRO account to the stock broker. On the settlement date, your stock broker will send the stocks to your demat account so you might want to verify with your depository participant if the stocks are credited in your account. If your demat account is also with the broker you are trading with, your life will be a bit simpler- one less institution to deal with. Also, thanks to the Internet, currently many banks and demat institutions offer online access to your accounts which comes handy in managing your investments in India. CLOSING/ SELLING YOUR INVESTMENT: Fortunately, repeat step 3 and 4 above. Place a SELL order with your broker. When your order is confirmed, transfer shares to your broker's clearing account from your demat account. After settlement, your broker will give you a check. Take that check and a copy of broker's bill showing the SELL transaction to your bank account for deposit. The bank will withhold some taxes on the gains you had and deposit the rest amount in your account. (Certain bank branches may require you to get a certificate about how much to withhold from your accountant or lawyer.) FILE YOUR TAX RETURNS EVERY YEAR: Most of the time, you might be able to get refund from the withholdings done by your banker. Sometimes you might owe additional taxes to Indian government. Check with your tax consultant in India. (There is only FEDERAL type of tax in India. There are no STATE or local taxes levied on individuals.) Also