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What stocks should I put in my portfolio?
Hi! My name is Michael and I am very interested in the stock market. I want to look at different stocks to see what I should get. I would really appreciate some help with setting up my portfolio. #business #finance #college #marketing
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Nicholas’s Answer
Hey Michael! First off, I am not a financial professional and this should not be taken as financial or legal advice. The general advice most advisors will give is to not invest in individual stocks, and rather to "dollar cost average" into total market index funds. Many brokerages, like Vanguard and Fidelity, offer such funds. The idea is to buy $x per week of these funds, which allow you to get the "average" of the total market. Research has consistently shown that individuals do not beat the market by picking specific stocks. Some do, sure, but it's often down to luck and does not hold up over the span of a lifetime.
Eventually, when you have more money, it can make sense to diversify into individual stocks. At this point, it's probably smart to speak to a professional to get their advice unless you want to make stock investing your hobby and passion. Along the way, if you really love a specific stock, it's totally fine to put some money into it. Just don't go "all in"...it almost never works out the way you hope.
1. Save up enough cash to cover 3 months of expenses
2. Start dollar cost averaging into total market index funds
3. Don't think about anything else until you have tens of thousands in the market minimum
4. Talk to a professional financial advisor (with fiduciary duty) about how to diversify your portfolio to meet your specific goals
Eventually, when you have more money, it can make sense to diversify into individual stocks. At this point, it's probably smart to speak to a professional to get their advice unless you want to make stock investing your hobby and passion. Along the way, if you really love a specific stock, it's totally fine to put some money into it. Just don't go "all in"...it almost never works out the way you hope.
1. Save up enough cash to cover 3 months of expenses
2. Start dollar cost averaging into total market index funds
3. Don't think about anything else until you have tens of thousands in the market minimum
4. Talk to a professional financial advisor (with fiduciary duty) about how to diversify your portfolio to meet your specific goals
Updated
Brian’s Answer
Research, research, research. I would think about the industries that have the best potential for growth and start reading up on the growth triggers in the industry. Then pick a couple of the industry leaders and start reading everything you can about them. What are the catalysts for growth? What are the trends that may impact their success? Read not only analysts' reports and other articles about the companies, but also the company's filings (quarterly earnings; annual report; other definitive proxy statement). Listen to the earnings releases. Are you confident in the leadership of the company? When you are confident in your understanding, I would start by investing a very small amount at first. Investing in one stock exposes you to volatility and significant upside (but also downside) risk.
It takes a lot of work and regular monitoring to be successful in picking individual stocks. While getting experience in monitoring and picking some individual stocks is a great start, it may be helpful to buy some ETF's (exchange traded funds) to get broad market exposure. Sometimes it is better (and less work) to track the broader market through index exposure rather than to be subject to the whims of an individual stock position.
It takes a lot of work and regular monitoring to be successful in picking individual stocks. While getting experience in monitoring and picking some individual stocks is a great start, it may be helpful to buy some ETF's (exchange traded funds) to get broad market exposure. Sometimes it is better (and less work) to track the broader market through index exposure rather than to be subject to the whims of an individual stock position.
Updated
neil’s Answer
I think its great that you have an interest in markets already. It will certainly stand you in a great position going forward.
I would encourage you to read as much as you can to gain an understanding of different investment vehicles - and the advantages & disadvantages of owning - individual stocks, mutual funds, ETFs, Separately Managed Accts etc. Once you feel you have a good understanding of those vehicles - explore the different categories within the equity asset class - Growth v Value , Domestic v International, Developed v Emerging Markets etc...and then delve deeper into sectors - energy, materials , industrials etc etc.
Rule of thumb - but may not be the case for you - most people starting out with their first investments will buy mutual funds - funds will provide you with diversification, lower initial investment outlay & access to professional managers. As you build your wealth you may look at that point to own individual equity positions that you like and of course over time your objectives could and probably will change.
You've taken a great first step, you have some great advice in the answers above already...enjoy the journey & good luck
neil
I would encourage you to read as much as you can to gain an understanding of different investment vehicles - and the advantages & disadvantages of owning - individual stocks, mutual funds, ETFs, Separately Managed Accts etc. Once you feel you have a good understanding of those vehicles - explore the different categories within the equity asset class - Growth v Value , Domestic v International, Developed v Emerging Markets etc...and then delve deeper into sectors - energy, materials , industrials etc etc.
Rule of thumb - but may not be the case for you - most people starting out with their first investments will buy mutual funds - funds will provide you with diversification, lower initial investment outlay & access to professional managers. As you build your wealth you may look at that point to own individual equity positions that you like and of course over time your objectives could and probably will change.
You've taken a great first step, you have some great advice in the answers above already...enjoy the journey & good luck
neil
Updated
Ed’s Answer
Never take advice from anyone else on a specific stock...don't try bulletin boards or other common forums. Ask yourself why if someone knows what they are doing would they be spending time posting. Take a simple course and learn investing tools to help you read reports. Mary Buffet, Warren's daughter wrote an easy to understand book on Financial reports as well as several others. Look at companies that have products you are interested in. Always have an exit plan and stick to it. Emotions will almost always cost you money. If you don't want to do the work and take risks, then the index funds previously mentioned are a good passive way of investing. IN that case you can look at the index funds largest holdings and start research companies on their list for practice.
Read books from notable investors like Warren Buffet or his daughter Mary.
Many community colleges have low cost short classes.
Ed recommends the following next steps:
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ted’s Answer
If you are interested in buying stocks you should do it in a balanced approach. For example, if you have $1k to spend, only put 15-20% of that in stocks at risk of very large losses and the remainder in stocks that have very steady growth profiles. This diversification will be valuable in volatile times.
Updated
Mark’s Answer
If you're looking at it from a "hobby" perspective, there are web sites that let you build portfolios without actually owning the stock. You could give yourself a starting fund of, say, $25,000 to play with and see how much you can grow it.
But with real money, yes, funds are the better way for most individual investors in my unprofessional opinion (my wife and I have substantial retirement savings, and NONE of it is in individual stocks).
But with real money, yes, funds are the better way for most individual investors in my unprofessional opinion (my wife and I have substantial retirement savings, and NONE of it is in individual stocks).
Updated
Dani’s Answer
Hi Michael,
For long-term saving, I'd suggest ETFs. There are many different funds you can be a part of that are low-risk. The key is dollar-cost averaging in order to see results over time. The more consistent you are at contributing to your investments, the more money you will make. You are young so you can be riskier as well since you have more time to make up that money, and don't have a lot at stake yet.
Hope this helps!
Dani
For long-term saving, I'd suggest ETFs. There are many different funds you can be a part of that are low-risk. The key is dollar-cost averaging in order to see results over time. The more consistent you are at contributing to your investments, the more money you will make. You are young so you can be riskier as well since you have more time to make up that money, and don't have a lot at stake yet.
Hope this helps!
Dani
James Constantine Frangos
Consultant Dietitian & Software Developer since 1972 => Nutrition Education => Health & Longevity => Self-Actualization.
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James Constantine’s Answer
Hi Michael,
Absolutely, I'm here to guide you through the process! Building a portfolio involves some crucial steps, and here are some simple rules to get you on track:
Diversification
Diversification is a vital strategy in portfolio management. It's about spreading your investments among various asset classes, sectors, and regions to lessen risk. By diversifying your portfolio, you aim for more steady returns over time. For instance, think about investing in large-cap, mid-cap, and small-cap stocks, along with bonds and other fixed-income securities. Expanding your investments to international markets can further diversify your portfolio.
Risk Tolerance
Understanding your risk tolerance is crucial when building a portfolio. If you're okay with higher risk, you might think about investing in small-cap stocks or other high-risk investments. But if you prefer less risk, you might want to stick to larger, well-established companies or fixed-income securities. It's vital to pick investments that match your risk tolerance and investment objectives.
Investment Horizon
Your investment horizon is another key factor. If you have a long-term perspective, you might be more open to higher risk for the chance of higher returns. But if your horizon is shorter, you might want to focus on more conservative investments that offer steady returns. Always choose investments that align with your investment horizon and goals.
Sector Selection
When picking stocks for your portfolio, consider the different sectors of the economy. Some sectors might be more volatile than others, so pick a mix of sectors that match your investment goals and risk tolerance. For example, tech stocks might be more volatile than utilities stocks, but they could also offer higher potential returns. On the flip side, utilities stocks might be more stable but offer lower potential returns.
Individual Companies
Once you've chosen the sectors, it's time to select individual companies. Look for companies with robust financials, promising growth prospects, and a competitive edge in their industry. Companies that pay dividends might also be worth considering as they can provide a regular income stream over time.
Here are some specific stock ideas for your portfolio:
Technology Stocks
If you're open to higher risk for the chance of higher returns, you might think about investing in technology stocks. Here are some popular tech stocks to consider:
Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Google (GOOGL), Facebook (FB), Tesla (TSLA), Nvidia (NVDA), Salesforce (CRM), Adobe (ADBE), Cisco (CSCO), Intel (INTC), Oracle (ORCL), Cisco Systems (CSCO), IBM (IBM), Twitter (TWTR), Snap Inc (SNAP), Pinterest (PINS), Spotify Technology (SPOT), Zoom Video Communications (ZM), Okta (OKTA), Twilio (TWLO), Palantir Technologies (PLTR), Asana (ASAN), Unity Software (U), Snowflake (SNOW), Roku (ROKU), Shopify (SHOP), Atlassian (TEAM), Square (SQ), The Trade Desk (TTD), ZoomInfo Technologies (ZI), HubSpot (HUBS), CrowdStrike Holdings (CRWD), DocuSign (DOCU), RingCentral (RNG), Smartsheet Inc Class A (SMAR), Zscaler Inc Class A (ZS), CrowdStrike Holdings Inc Class A Common Stock ($CRWD), DocuSign Inc Class A Common Stock ($DOCU), RingCentral Inc Class A Common Stock ($RNG), Zscaler Inc Class A Common Stock ($ZS).
Remember, technology stocks can be volatile and may not be suitable for all investors. Always do your research and consider seeking advice from a financial advisor before making any investment decisions.
Healthcare Stocks
The healthcare sector could also be worth considering for your portfolio. Here are some popular healthcare stocks:
Johnson & Johnson ($JNJ), Pfizer ($PFE), Merck ($MRK), Abbott Laboratories ($ABT), Thermo Fisher Scientific ($TMO), UnitedHealth Group ($UNH), Anthem ($ANTM), CVS Health ($CVS), AmerisourceBergen ($ABC), Cardinal Health ($CAH), McKesson ($MCK), Humana ($HUM), Cigna ($CI), Fresenius Medical Care ($FMS), DaVita Inc ($DVA).
Remember, healthcare stocks can also be volatile and may not be suitable for all investors. Always do your research and consider seeking advice from a financial advisor before making any investment decisions.
Financial Services Stocks
The financial services sector could also be worth considering for your portfolio. Here are some popular financial services stocks:
JPMorgan Chase ($JPM), Bank of America ($BAC), Wells Fargo ($WFC), Citigroup ($C), Goldman Sachs ($GS), Morgan Stanley ($MS), BlackRock ($BLK), Charles Schwab ($SCHW), American Express ($AXP), Visa ($V), Mastercard ($MA).
Remember, financial services stocks can also be volatile and may not be suitable for all investors. Always do your research and consider seeking advice from a financial advisor before making any investment decisions.
Stay blessed!
James Constantine Frangos.
Absolutely, I'm here to guide you through the process! Building a portfolio involves some crucial steps, and here are some simple rules to get you on track:
Diversification
Diversification is a vital strategy in portfolio management. It's about spreading your investments among various asset classes, sectors, and regions to lessen risk. By diversifying your portfolio, you aim for more steady returns over time. For instance, think about investing in large-cap, mid-cap, and small-cap stocks, along with bonds and other fixed-income securities. Expanding your investments to international markets can further diversify your portfolio.
Risk Tolerance
Understanding your risk tolerance is crucial when building a portfolio. If you're okay with higher risk, you might think about investing in small-cap stocks or other high-risk investments. But if you prefer less risk, you might want to stick to larger, well-established companies or fixed-income securities. It's vital to pick investments that match your risk tolerance and investment objectives.
Investment Horizon
Your investment horizon is another key factor. If you have a long-term perspective, you might be more open to higher risk for the chance of higher returns. But if your horizon is shorter, you might want to focus on more conservative investments that offer steady returns. Always choose investments that align with your investment horizon and goals.
Sector Selection
When picking stocks for your portfolio, consider the different sectors of the economy. Some sectors might be more volatile than others, so pick a mix of sectors that match your investment goals and risk tolerance. For example, tech stocks might be more volatile than utilities stocks, but they could also offer higher potential returns. On the flip side, utilities stocks might be more stable but offer lower potential returns.
Individual Companies
Once you've chosen the sectors, it's time to select individual companies. Look for companies with robust financials, promising growth prospects, and a competitive edge in their industry. Companies that pay dividends might also be worth considering as they can provide a regular income stream over time.
Here are some specific stock ideas for your portfolio:
Technology Stocks
If you're open to higher risk for the chance of higher returns, you might think about investing in technology stocks. Here are some popular tech stocks to consider:
Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Google (GOOGL), Facebook (FB), Tesla (TSLA), Nvidia (NVDA), Salesforce (CRM), Adobe (ADBE), Cisco (CSCO), Intel (INTC), Oracle (ORCL), Cisco Systems (CSCO), IBM (IBM), Twitter (TWTR), Snap Inc (SNAP), Pinterest (PINS), Spotify Technology (SPOT), Zoom Video Communications (ZM), Okta (OKTA), Twilio (TWLO), Palantir Technologies (PLTR), Asana (ASAN), Unity Software (U), Snowflake (SNOW), Roku (ROKU), Shopify (SHOP), Atlassian (TEAM), Square (SQ), The Trade Desk (TTD), ZoomInfo Technologies (ZI), HubSpot (HUBS), CrowdStrike Holdings (CRWD), DocuSign (DOCU), RingCentral (RNG), Smartsheet Inc Class A (SMAR), Zscaler Inc Class A (ZS), CrowdStrike Holdings Inc Class A Common Stock ($CRWD), DocuSign Inc Class A Common Stock ($DOCU), RingCentral Inc Class A Common Stock ($RNG), Zscaler Inc Class A Common Stock ($ZS).
Remember, technology stocks can be volatile and may not be suitable for all investors. Always do your research and consider seeking advice from a financial advisor before making any investment decisions.
Healthcare Stocks
The healthcare sector could also be worth considering for your portfolio. Here are some popular healthcare stocks:
Johnson & Johnson ($JNJ), Pfizer ($PFE), Merck ($MRK), Abbott Laboratories ($ABT), Thermo Fisher Scientific ($TMO), UnitedHealth Group ($UNH), Anthem ($ANTM), CVS Health ($CVS), AmerisourceBergen ($ABC), Cardinal Health ($CAH), McKesson ($MCK), Humana ($HUM), Cigna ($CI), Fresenius Medical Care ($FMS), DaVita Inc ($DVA).
Remember, healthcare stocks can also be volatile and may not be suitable for all investors. Always do your research and consider seeking advice from a financial advisor before making any investment decisions.
Financial Services Stocks
The financial services sector could also be worth considering for your portfolio. Here are some popular financial services stocks:
JPMorgan Chase ($JPM), Bank of America ($BAC), Wells Fargo ($WFC), Citigroup ($C), Goldman Sachs ($GS), Morgan Stanley ($MS), BlackRock ($BLK), Charles Schwab ($SCHW), American Express ($AXP), Visa ($V), Mastercard ($MA).
Remember, financial services stocks can also be volatile and may not be suitable for all investors. Always do your research and consider seeking advice from a financial advisor before making any investment decisions.
Stay blessed!
James Constantine Frangos.