Finance

Tips on how to choose a stock that fits you

If are you looking for investing in a stock, but don't know how to choose the one that is perfect for you, check out this guide!

Advertisement

Investing in stock can be the first you get for a better financial life in the future, or perhaps, even the beginning of your journey towards becoming a rich person.

However, it is very important that you know how to choose a stock that befits not only your philosophy but also your goals.

Many people think that the stock market is kind of a lottery, one of the main main reasons is that many people do not study the stocks they buy, and as a result, their profits or losses are as random as a lottery ticket.

In this article, we will be discussing some things that you need to keep an eye out for, so you will be able to choose a stock that fits you.

We will purposefully avoid talking about some indicators, like PE Ratio and PS Ratio, because we want to focus on the people who perhaps are choosing their first stock, so there are things as important as these indicators right now.

The stocks Bill Gates uses to generate a lot…

Even a tech billionaire can use the stock market in his favor. Check out these stocks Bill Gates is using to generate income for him.

Set up your investment goal.

Not everyone wants the same thing with their money. Younger persons may want to increase their portfolios and look for long-term investments, while older people may want safer options, that gives them dividends for the rest of their life.

This kind of matter falls on another characteristic: your investor profile.

Some people may be more susceptible to high-risk, high reward kind of investments, such as investing in startup stocks, new companies that may increase exponentially their valuation, or break up in the next year.

There are people, however, who prefer to invest in safer options, like banks or big companies like Apple and Disney, whose valuation isn’t likely to explode, but are solid and good dividend yielders.

The other option is the “best of two worlds”, people who prefer owning some of these safer options and use part of their profits investing in more risky adventures. However, even the ratio of safe companies- startup investment differs from person to person, according to their risk.

However, no matter this profile, one tip remains very much relatable

Investing in what you understand

We are wanting to find the best stock for you and try to avoid the “lottery effect” that buying a stock without knowing it might have. So, in order for this to happen, start with what you already understand.

For example, if you work in a bank, it is more likely that you understand how a bank work, in this case, maybe owning some Bank of America stock may be a good option.

However, if you are an engineer and work on construction sites, you may be more in touch with what makes Caterpillar so valuable.

So, if you want to find a stock that fits, you should begin to look in areas and segments where you have some real experience on it. This way you will enter the stock market knowing something, and have a more understanding of where you are putting your money.

Invest in companies that people are using or are likely to use

This is a very interesting thing that Peter Lynch shows us in a book of his. He says that when he wants to buy a new stock, he usually goes out and takes a look at products and services that people are using or are beginning to use and their popularity is rising.

What many people need to understand is that what makes a company valuable is how many people are using it, so, sometimes getting your eyes off the screen and looking through the world is the best way to choose a stock.

However, these are just some tips to help a first-time stockbroker. The financial reports are important, and if you could spend some time studying and understanding them, it would do wonders for your portfolio.

Trending Topics

content

Applying at NNPC – Up to ₦ 4,823,000 per year as the average salary!

If you are looking for an article that can help you excel as an NNPC employee and understand its application process, here it is!

Keep Reading
content

Apply at Eskom – An average payment of R 469 764 a year!

One of the largest state-owned businesses, Eskom may be able to provide you with a fantastic work opportunity. Learn how to apply!

Keep Reading
content

What are the most important insurances to be looking for you?

Insurances are essential to help us in that moments of distress we weren't expecting. These are some of the most important ones.

Keep Reading

You may also like

content

Applying at Party City – $28,198 per year can be your salary!

If you want to learn more about the application process and some soft skills that you might want to have at Party City, this is the article!

Keep Reading
content

Stocks that billionaire investors agree it is safe to buy now

Having a good person to follow is always a good option. So, take a look at some of the stocks billionaire investors are buying.

Keep Reading
content

Applying at Coca-Cola – $93,508 per year can be your salary!

Are you looking to how to apply for Coca-Cola? Check out the application process and other things that can help!

Keep Reading