INVESTING IDEAS: HOW TO BUY AND INVEST IN STOCKS
Investment Ideas come in all shapes and sizes. Find the one that’s right for you. Then practice what you’ve learned with our free stock market simulation.
HOW TO INVEST IN STOCKS
Investing in stocks is easier than you think. The first thing you need to do to invest in stocks is open a brokerage account, if you don’t already have one. The brokerage industry is real competitive right now so you are lucky. Many brokers are offering great deals like “commission free trading for 90 days” and “your first 300 trades commission free.” So click here to see the latest offers, review the different features, and find a stock brokerage that is right for you. Keep in mind that it might take a few days to get your account open and funded, so go ahead and fill out the application now so you can get approved and start the funding process. If you already have a brokerage account, then consider switching and taking advantage of these great commission free trading deals.
To invest in stocks, the second thing you need to do is put together a list of stocks that you want to invest in. This is the harder part of stock investing. While some suggest that you only invest in what you know, it’s actually not that simple. You should also understand if the company is profitable, and most importantly, what the future looks like for that company. To get started, we strongly suggest you subscribe to a reputable stock advisory service. Here at WallStreetSurvivor we subscribe to the most popular services and we actually paper trade their recommendations. Over the last year, the best stock picking service was Motley Fool’s Stock Advisor which is up 300% compared to the SPY’s 85%. When you subscribe to that service, you will get a few picks each month. Read their analysis and then use your own judgement.
The Motley Fool service follows a blend of Growth and Value Investing Strategies. Some different styles of investing include:
A swing trading position is held longer than a day trading position, but shorter than a buy and hold investment strategy that can be held for months or years. Typically, a tradable asset would be held for days at a time in order to profit from price changes or ‘swings.’ Profits can be attained by either buying an asset or by short selling.
Learn more about Swing Trading
A value investor believes that the market overreacts to both good and bad news. He/she would look for stocks that they believe the market has undervalued; thereby profiting by buying when the price is deflated.
Learn more about Value Investing
Growth investors invest in companies that show above-average growth. Growth investing focuses on capital appreciation. Growth investing kind of contrasts with value investing.
Learn more about Growth Investing
Great chess players don’t sit at a board and just…play.
Masters of the game have a very concrete plan of how they intend to play. They decision-making that can adapt to whatever their opponents throw at them. Investing is no different: you need a plan to guide your investment decisions!
Deciding What To Invest In
Deciding what to invest in is a constant challenge for even the most experienced investor. Nobody really knows that the stock market will do tomorrow. However, an analysis of the last 20 years, 50 years and even 100 years shows that among stocks, bonds, gold, real estate, and bank money markets?without a doubt the best place to invest has been the stock market. So if you are trying to decide what to invest in, if you have a time horizon of more than a few years, the best place to invest is the stock market.
If you know you are ready and willing to invest in the stock market, let’s get started. If you don’t have a brokerage account, or even if you do, click here to see the best review of stock brokers and get up 300 trades commission free.
Now that you have a good brokerage account, it’s time to decide what to invest in. The best place to start is with some Exchange Traded Funds, or ETFs. ETFs are a way to buy a basket of stocks in a single transaction. One of the most popular ETFs is one that matches the S&P500 Index. It has a ticker symbol of SPY. This is popular because a lot of people have the attitude of “if you can’t beat’em, then join them.” In other words, instead of trying to pick stocks that will outperform the stock market, just invest in stocks that match the market. The SPY is the probably the safest place to start when you are trying to decide what to invest in for the first time.
When you are ready to start picking individual stocks, we suggest you subscribe to one of the top performing stock newsletters. The one that has performed best over the last decade has been the Motley Fool’s Stock Advisor which is up 300% compared to the SPY’s 85%. This service is just $19 a month or $99 a year and is well worth it as you get up to a dozen picks each month. We suggest signing up for their service, and reading their stock analysis. Even if you don’t buy all of their picks, it is a GREAT way to learn about researching stocks and what to look for when you are trying to decide what to invest in.
Here is some more advice:
ETFs have become hugely popular over the recent years as a way for novice investors to begin investing. In addition to index ETFs that match the SP500 or the DOW Jones Industrial Average, there are ETFs specific to industries, countries, metals, oils, currencies, etc.
Select your stocks based on specific criteria (sector, industry etc.) Use a screener to further sort companies by dividend yield, market cap and other super useful metrics.
Keep up-to-date. Read stock analysis articles. Read financial news releases. Stay critical.
Know Different Types of Investments
Bonds, or fixed-income securities, are debt investments in which an investor loans money to an entity, with interest. The borrower borrows the funds for either a fixed or variable period of time.
Mutual funds are operated by money managers and should match the investor’s objective. They are made up of a bunch of funds collected from many investors and the purpose is to invest in securities like stocks, bonds, etc.
Small-cap investors are the risk takers. These small companies have huge potential for growth. However – because they are often under-recognized, more research is necessary. This requires the investor to have more time available to properly crunch numbers.
Large-cap investors are more conservative – these guys like to play it safe. With their steady dividend payouts, these big-cap blue chip companies are as stable as they come
Penny stocks are super high risk because of their lack of liquidity. Beginners are often lured in to these stocks because of their crazy low share price. This allows investors to hold thousands of shares for a relatively small amount of invested capital. With a scale like that, the gain of just a few cents per share can translate into major returns.
How To Buy Stock
Here are the necessary steps to buy stock:
- Learn the basics
- Figure out your investment goals
- Determine your risk tolerance
- Find your investing style & strategy
- Learn the costs
- Find a broker/adviser
- Pick your investments
- Keep your emotions separate
- Review and adjust your portfolio
Finding Good Stocks To Buy
Within each stock sector, the ultimate goal is to find the stocks that are showing the greatest price appreciation. In the same way that one would pay attention to sectors, multiple timeframes should also be examined to make sure the stock in question is moving well over time. There are two main things to keep an eye on when selecting stocks:
It isn’t smart to invest in a stock that has very little volume. What if quick liquidation is required? Selling it at a fair price will be extremely difficult if not impossible. Unless you are a seasoned trader, invest in stocks that trade at least a couple hundred thousand shares per day. Save yourself the headache.
Trade in stocks that are at least $5. Don’t shy away from a stock just because of its high price. Don’t buy a stock just because of its low price.
Want to invest like The Greats? Take a look at the strategies these big guys used to earn their names:
Warren Buffet is considered a value investor. Essentially, he selects stocks that are priced at a significant discount to what he believes is their intrinsic value. When Buffett buys stocks, he buys them for keeps. This requires a lot of discipline: it’s hard to resist buying or selling when the market seems perfectly ripe to act.
Buffet views the stock market as temperamental. He doesn’t panic when stocks plummet, or celebrate when they skyrocket. Instead, the Oracle of Omaha maintains the “keep calm and carry on” mantra, only buying stocks he intends to hold indefinitely, if not forever.
Lynch is also a value investor who stresses fundamental analysis . Lynch’s bottom-up approach involves focusing on an individual company, rather than the entire industry or the market as a whole. The idea here is that what really matters is the quality and growth potential of a specific company, regardless of whether the industry is under-performing or even in a tailspin.
Here are 3 additional Lynch stresses when looking at a company from the bottom up:
- Good research pays off
- Shut out market noise
- Invest for the long term
Philip Fisher was a growth investor. He consistently invested in well-managed, high-quality growth companies. He would hold on to these for the long term. His famous “fifteen points to look for in a common stock” were divided up into two categories: management’s qualities and the characteristics of the business itself.
When Fisher found an investment he liked, he wasn’t afraid to take an outsized position of the stock within his portfolio. In fact, Fisher sometimes downplayed the value of diversification. He often found himself scouring the tech sector because the pace of c hange there creates an environment that is ripe for disruptive innovations.
Best Stocks To Buy In 2018
Here are some best performing stocks of 2018:
|LENNOX INTERNATIONAL INC|
|VIVINT SOLAR INC|
|FIRST INTERNET BANCORP|
|INSTALLED BUILDING PRODUCTS INC|
|NCI BUILDING SYSTEMS|
|SEAGATE TECHNOLOGY PLC|
|DECKERS OUTDOOR CORP|
ENERGY TRANSFER PARTNERS LP
ARISTA NETWORKS INC