In a previous post, I outlined the reasons why to avoid any type of investment (besides the purchase of an asset) other than a stock. But that post deals with more of why not to invest in a mutual fund or, to a lesser extent, an index fund. Stocks truly are where it's at, particularly if you have 5 or more years that you are able to invest your money.
General Perks
Stocks provide the greatest opportunity for growth without a significant amount of risk. If you are smart about your investment, and only review it once per year, then you will avoid the emotions that most investors ride and suffer from. Each investor knows the basic principals of buy low, sell high - but despite this, millions of investors pulled their money out of the market when it dropped 20%, 30%, 40% and 45% in the great recession a few years ago.
Knowing What to Buy
Over the years of investing, I have learned that the greatest asset to any investor is research. I fully utilized the skills that I gained through journalism and applied them to stock market. In the olden days, a time that I fortunately wasn't around for, investors had to pour hundreds of hours into searching the details of their stocks. The average investor was at a huge disadvantage because those who were relatively close to the company received the quality of information any investor should know before buying. The average Joe would have to wait for reports in newspapers, but a large amount of that information wasn't useful.
Now, once you open an online investment account, you have 20 years or more of information about the stock's performance and you can look at financial reports from up to 5 years ago. If you want to go further back, you can request the information from the company's public relations officer.
Type of Information for Which to Look
I will get into more detail about the exact process in a week or two when I start looking to see where I want to put my money. But, in the meantime, start thinking about the company's chart. Look at the stock's past performance and line up the opening price to where it is now. Move a ruler down at the top half until you get a rough estimate of the growth (This will be in line with the opening price, but lower to consider the stock's downtimes). Look at where the ruler is lining up with the price in a year, 2 years, 5 years and 10 years from now. Is this where you would like the price to be when you sell your stock. Consider the length in which you want to put your money in the account.
Next, you should only look at stocks with a track record dating back to about 3 years ago.You may miss a lot of gems this way, but those company's stand a much larger chance of losing your money.
Look at the gains over the past five years. If the company has increased profit by 10% or more, then it is worth keeping on you list.
These are just a few of several tips when choosing a stock. More information is to come.
As usual, if you have any questions or comments, feel free to include your commentary below. Happy Investing!
General Perks
Stocks provide the greatest opportunity for growth without a significant amount of risk. If you are smart about your investment, and only review it once per year, then you will avoid the emotions that most investors ride and suffer from. Each investor knows the basic principals of buy low, sell high - but despite this, millions of investors pulled their money out of the market when it dropped 20%, 30%, 40% and 45% in the great recession a few years ago.
Knowing What to Buy
Over the years of investing, I have learned that the greatest asset to any investor is research. I fully utilized the skills that I gained through journalism and applied them to stock market. In the olden days, a time that I fortunately wasn't around for, investors had to pour hundreds of hours into searching the details of their stocks. The average investor was at a huge disadvantage because those who were relatively close to the company received the quality of information any investor should know before buying. The average Joe would have to wait for reports in newspapers, but a large amount of that information wasn't useful.
Now, once you open an online investment account, you have 20 years or more of information about the stock's performance and you can look at financial reports from up to 5 years ago. If you want to go further back, you can request the information from the company's public relations officer.
Type of Information for Which to Look
I will get into more detail about the exact process in a week or two when I start looking to see where I want to put my money. But, in the meantime, start thinking about the company's chart. Look at the stock's past performance and line up the opening price to where it is now. Move a ruler down at the top half until you get a rough estimate of the growth (This will be in line with the opening price, but lower to consider the stock's downtimes). Look at where the ruler is lining up with the price in a year, 2 years, 5 years and 10 years from now. Is this where you would like the price to be when you sell your stock. Consider the length in which you want to put your money in the account.
Next, you should only look at stocks with a track record dating back to about 3 years ago.You may miss a lot of gems this way, but those company's stand a much larger chance of losing your money.
Look at the gains over the past five years. If the company has increased profit by 10% or more, then it is worth keeping on you list.
These are just a few of several tips when choosing a stock. More information is to come.
As usual, if you have any questions or comments, feel free to include your commentary below. Happy Investing!
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