If you have decided to begin investing in the stock markets to improve your financial future, let me be the first to say congratulations. As a beginning investor, I’m sure one of the things you are most interested in knowing is how to best fit the stock. Luckily for you, even the most average investor in stocks sees a return yearly of around 9%. That’s a pretty good average for a return. Of course, I am certain you want to be more than the average investor. So just how do you learn to pick the right stocks?
Well, as you have probably assumed from the title of this post, the first step is to determine your goals. People invest in stocks differently and for different reasons. While many people tend to invest as a way to save for retirement, others are looking save money for their child’s college fund for a different life-changing events in the future. There are other still who are just for a different stream of income to have spending money. While many people are looking for potentially big gains, others invest preserve what money they already have.
Generally speaking, there are two sides of the spectrum in investing: income and growth. There’s a good chance that your investing strategy will be on the spectrum as well. If you are looking for growth, you will likely target stocks that are priced high and are proven to have lots of potential with strong growth rates. We are talking big companies, such as Microsoft and Amazon. If you are investing for income, though, you will likely favor more stable companies that grow slower and pay dividends, such as McDonald’s and Pepsi. These companies are often referred to as blue chips.
The main determiner of your investment goals is your life situation. If you are a younger adults wanting to save for your first home or for retirement, you will likely prefer a growth strategy. If you are older and want to supplement your income, it is best to stocks with a reliable dividend.
Once you have determined your goals for investing, it is time to move forward and learn the basics of investing in stocks.