Now that we’ve answered the question of how you buy stock, if you’re looking for some great beginner-friendly investment ideas, here are five great stocks to help get you started.
Of course, in just a few paragraphs we can’t go over everything you should consider when selecting and analyzing stocks, but here are the important concepts to master before you get started:
- Diversify your portfolio.
- Invest only in businesses you understand.
- Avoid high-volatility stocks until you get the hang of investing.
- Always avoid penny stocks.
- Learn the basic metrics and concepts for evaluating stocks.
It’s a good idea to learn the concept of diversification, meaning that you should have a variety of different types of companies in your portfolio. However, I’d caution against too much diversification. Stick with businesses you understand — and if it turns out that you’re good at (or comfortable with) evaluating a particular type of stock, there’s nothing wrong with one industry making up a relatively large segment of your portfolio.
Buying flashy high-growth stocks may seem like a great way to build wealth (and it certainly can be), but I’d caution you to hold off on these until you’re a little more experienced. It’s wiser to create a “base” to your portfolio with rock-solid, established businesses.
If you want to invest in individual stocks, you should familiarize yourself with some of the basic ways to evaluate them. Our guide to value investing is a great place to start. There we help you find stocks trading for attractive valuations. And if you want to add some exciting long-term-growth prospects to your portfolio, our guide to growth investing is a great place to begin.