There are many stocks out there in different sectors and businesses and they are not difficult to find but finding the right one is difficult. Choosing your first stocks is one of the most challenging aspect in your investing career. There are so many opinions out there saying this is the best strategy or technique in picking the right one.
This article will not give you about opinions on what is the best but it will try to guide you on which factors that is important to consider.
What is the goal of this investment?
Are you planning for a trip in 5 years? Are you saving for a house and lot? Is this money for your retirement? Goals affect your decision in your choice of stocks because if the goal of the investment is to have high returns so that you can purchase your dream home, you will probably choose stocks that are high yielding and very risky.
What is the sector that you think will grow?
Beliefs is very important in trading because it keeps you on tract. If you invest in something that you do not believe in there is a high chance that if the price drops for a minimal movement you will panic and sell the stock immediately. Invest in something that you understand and what you believe in.
Create a wish list
From the list of stocks in your country’s index, you should get a list of stocks that you want to invest in. From this initial list, you will conduct your further research in which stocks are the best ones to invest into, which will narrow your list further.
Invest in what you know
A new investor should not spend a lot of time following stock tips or reading different types of technical analysis because it will just be very confusing and it mind end up discouraging because of a number of lessons out there. What a new investor must do is to buy what you understand. Being familiar with the company that you will invest in gives you an advantage of knowing if the company has done well in the past and how they are doing currently.