Deciding what to invest in is a struggle all teens and beginning investors have. I mean there are over 2,000 stocks on Bumper and deciding to invest in just a few is difficult. So, how do you pick stocks?
Well first, we have to determine our investing goals and purpose for investing. To make it easier, below we have listed four buckets of objectives to choose from. So, why did you start investing?
Most teens have the goal of capital growth. It is important to understand yours, so you can properly measure your success and determine what type of stocks to invest in. For capital growth, a teen investor might be more focused on buying blue-chip stocks, while a speculative trader would be more interested in penny stocks.
Now that you have a better understanding of where your purpose of investing lies, we can move on to what industry to invest in. This one is easy. It’s a simple question for yourself. What industry do you enjoy reading and hearing about?
Finding an industry you are interested in or already know can help you determine the market leaders and companies that are top performers in the industry. These performers may already propose great investments, however, to assure they live up to the hype, we can do some analysis. If you are unsure of the industry, check out its latest news to find some of the hottest companies in the market.
Over the last few bites, we have covered several ways to analyze a stock but now you can use that information and apply it to pick one winner. It's not easy. Investing is not a get-rich-quick scheme. It takes time, but that effort can pay off!
Your investments are not always guaranteed to be successful, which will make it important to diversify your portfolio. Having multiple stocks in a variety of your favorite industries will help you reduce risk!
Alright, let’s review.
This is easy to read about, but now it's time for you to give it a try. When you get back, we will be checking out our first investing strategy, dollar-cost averaging!