It’s easy to allow yourself to get daunted by the prospect of investing or becoming an investor. After all, as a first-timer, you have yet to cultivate the sharp instincts that seasoned investors possess. Remember that, at one point in their lives, these successful investors were also where you are right now. They allowed themselves to learn as much as they can while also making room for failure. With patience and a good dose of determination, you will soon be on the road to success.
Cover your bases
But before we delve into the types of stocks with which you can fill your starter portfolio, it’s best to check if you have covered all your financial bases. Meaning, you should err on the side of caution by building a stable base for your finances.
Secure your emergency fund by setting aside money that can cover three to six months’ worth of expenses. If your employer offers a retirement plan, join it if you can. If you’re self-employed, open a Traditional or Roth IRA. Once you have planned for all your necessary financial expenses, you can proceed to use your extra money to invest in stocks.
Despite what the term might suggest, picking stocks is not a light, impulsive endeavor. The success of your investment portfolio lies in the type of stocks you choose so choose well.
When determining which stocks to purchase, look for the following essentials:
- Fair stock price
- Steadily growing revenues
- Strong market position
- The possibility of a dividend payout
- Sustainable plans for continued growth
You can access this information through the company’s website. You can also find relevant information by accessing corporate filings with the U.S. Securities and Exchange Commission.
And finally, take advantage of good investing advice available online. Bookmark finance sites like The Motley Fool, Yahoo! Finance, and CNN Money, among others, and check them regularly. Once you’ve zeroed in on the companies you’d like to invest in, check historical stock performance from several stock indexes, such as the New York Stock Exchange (NYSE), S&P 500, and NASDAQ.
It’s important to keep in mind that the stock exchange is a lot like a real-time auction where traders’ interest in a certain stock can affect its price for the day. Current affairs also affect a stock’s price, so it’s best to consult historical information as a gauge for a company’s stability.
Safe stocks to consider for a first-time investor
A first-time investor have to get over the intimidation of building a starter portfolio. And to do that, sometimes you need to get your feet wet before you build up the courage to pick stocks on your own. Here are some of the safe stocks that are perfect for first-time investors:
- Berkshire Hathaway (BRK-A and BRK-B)
According to several financial advisors, you can’t go wrong with investing in the Warren Buffett-led conglomerate. What makes it safe for first-time investors is that Berkshire Hathaway, with its diverse and well-managed businesses, can be likened to investing in a diversified mutual fund.
- Walt Disney Co. (DIS)
The media conglomerate has influenced the lives of many; its brand positioning and staying power are undoubtedly strong. Due to its business model of monetizing its characters and franchising across multiple platforms—merchandising, parks, resorts, movies, and musical—Walt Disney is another safe option for the first-time investor.
- Facebook (FB)
The leading social network in the world has positioned itself in a way that it can defend itself against competitors while ensuring its continued growth. Investing in Facebook means also investing in a wide range of assets that it owns, which include Instagram, Whatsapp, Messenger, and Oculus.
Taking the advice of financial websites and advisors on which stocks to invest is well and good. But successful investing can be boiled down to two critical factors: invest in companies that you know and consider a brand’s staying power.
To ensure that you fill your starter portfolio with the right stocks, put in a bit more time researching. After all, you will own a piece of these businesses for a long time.