About 50% of the United State’s population owns stocks. Some of these stocks are hand-picked by their owners and others are issued to them through their retirement handlers.
No matter how you came into stock ownership, it’s always good to know what elements go into successfully picking stock market investments that are likely to yield returns. Therein lies the purpose of this post.
Below, our team shares some stock market investment rules of thumb that can help you get to the bottom of which investments might work best in your portfolio.
1. Know Your Goals
The number one thing you need to do when assessing a stock market investment is to understand what your goals in the stock market are.
Is your goal to earn steady growth over a long period of time? Are you more focused on scoring quick wins so you can cash out fast returns?
These factors will determine if your money is suited for more stable investment options like stock in Apple or if you should be picking up stock certificates (which you can read on here) for more dynamic, off-brand companies.
2. Understand the Company You’re Investing In
It may seem like a no-brainer but you’d be shocked by how many people pour thousands of dollars into companies they know absolutely nothing about. If you do nothing else when assessing a stock market investment, take a moment to learn a little bit about the company you’re thinking of buying.
What does the company produce? How much do a company’s employees generally like working at their place of business? How long has the company been in operation?
Understanding a handful of simple factors surrounding your organization can give you an easy and important context that can help you determine if an investment makes sense.
3. Weigh Analyst Predictions
Analyst predictions are not the be all end all of whether or not you should put money into a stock. It can be helpful to weigh professional opinions though so do take a moment to assess what people are saying about your stock.
Are analysts recommending sell-offs? Are they telling their followers to buy?
If you’re seeing patterns in recommendations, listening may be helpful.
4. Consider Diversity Implications
Having a diverse portfolio adds stability to your investments when economic strife hits. That’s why we always recommend buying new stocks that add to your portfolio’s diversity as oppose to stocks that continue to bolster your position in a single industry.
To gauge the diversity of your portfolio, break your holdings into business categories, and ask yourself if category A went out of business, how would category B fare?
Optimally, category B would hold stable or pick up momentum.
5. Are You Excited to Own This Company?
This checklist item isn’t necessarily needed but it’s something we think is important to keep you excited about investing. In a perfect world, you’d be interested in all of the companies you’re putting money into and that interest would keep you engaged in that company’s dealings.
So, are you excited to own a piece of the company you’re thinking of investing in? If you are and everything else checks out, proceed with confidence.
A Good Stock Market Investment Can Secure Your Future
The reason why picking a good stock market investment is so important is because people build their retirements on the foundation of solid stock picks. If securing your future is as important to you as it is to most, getting fluent in investing should be a priority in your life.
We hope our post has added to your interest in investing in stocks competently and we welcome you to browse more content on our blog for additional guidance.