So you finally decided to start investing!
Investing in a stock can be a tough decision. With so many stocks to choose from, how do you find one worth buying?
Determine Your Goals
Everyone's reason for investing is to make more money — aka a return — but not every investor is looking to achieve the same thing with their money.
Younger investors want to increase their money as much as possible over a longer period of time
Older investors want to protect their money to avoid losses
Defining your investment goals will help you look for the right stocks that meet your needs.
Do Your Homework!
Stocks are an ownership stake in a company. When you buy a stock, you actually become an owner of a small percentage of the company.
Before buying any stocks, research several companies to understand what they do.
What field or market is the company in?
How long has it been around?
How successful has it been?
Does it make a lot of products that people purchase?
Understanding the basics of a company can help you figure out if investing in the business will offer you good returns or protect you from losing money.
Tip: You use dozens of products daily, so take the time to consider the companies behind them.
Would investing in these companies help meet your goals?
What should you consider before buying a stock?
Keep It Simple
Start slowly by buying one or two stocks. Monitor these stocks and learn from how they perform.
Understanding these patterns will allow you to anticipate the right move to make with those stocks. Then, you can start to add more stocks.
Stay On Course
Be disciplined and consistent!
Continue to make your regular contributions and monitor your investments
If necessary, make slight changes based on the performance of your stocks and changing market conditions
Make sure you understand any new investments you're considering
Taking full control of your own investments can help you to stay committed in the long run...and have a lot of fun, too!
You can also save money on broker fees
Scenario: Andrew's Investment
After extensive research, Andrew decided to buy his first stock in a company that he values and trusts. Andrew has been monitoring his stock for quite some time and notices that his investment is bringing him some decent returns.
What should Andrew do next?
A. Sell his current stock and look into buying even better stocks
B. Continue to monitor his current stock and look into buying additional stocks
C. Put all of his money into his current stock
D. All of these
What should Andrew do?
There Are No Guarantees
It's important to understand that even your best strategy can still produce losses.
The reality of investing is that both markets and stocks rise and fall. No investment ever completely ensures you'll make money.
If you decide that choosing your own stocks isn’t for you, try a robo-advisor instead.
What's a robo-advisor?
An automated investing service that uses computer algorithms and software to manage your investment portfolio
It collects information about your financial goals and situation, and uses that information to offer advice and automatically invest your assets
If you aren’t ready to invest any real money just yet, try a stock simulator:
It imitates real-life scenarios of the stock market
You can use pretend money to "buy" stocks and test the world of investing without any of the risk
It'll help you to determine how you'd react if this were your real money on the line
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This Byte has been authored by
Instructional Designer | eLearning Development