Investment 101: How to Pick Good Stocks
Did you know about 55 percent of Americans own a stock?
It’s clear the stock market is the go-to investment destination for most Americans. It’s no wonder you’re looking to join them. There’s no doubt investing in the stock market is an ideal way to grow your wealth and get rich.
However, the stock market isn’t the ultimate land of milk and honey. It’s possible to lose money in stocks. In fact, millions of Americans have lost millions of dollars there.
Do you know what makes the difference? The kind of stocks you invest in.
Continue reading for a guide on how to pick good stocks.
Table of Contents
Understand How Investing in Stocks Works
The first step to choosing a good stock is to have an intricate understanding of how investing in stocks works. If you have found this CheckMan site, you will already have a good idea about the current overview of the stock market and the trending stocks that you can invest in. But what happens then?
Well, when you invest in stocks (buy a stock), the general expectation is its share price will increase, after which you can sell and make a profit.
To illustrate, if you buy 100 Company A shares at $10 per share, you’ll spend $1,000, excluding any associated fees.
If Company A’s share increase to $20 a share, your investment will be worth $2,000. If you sell all your shares, you’ll make a $1,000 profit. Easy enough, right?
That’s not the only way to make money from stocks. When you purchase a stock, you effectively become a shareholder in the company. As such, if you hold the shares long-term, you could get a dividend payment per share every year, as long as the company elects to make those payments.
The next thing to understand is the elements that affect the movement of a share price. The American economy affects the stock market, but it’s the financial performance and future earning expectation that will move the share price of a company the most.
Company Stability and Performance
You want to buy stock in a company that has a record of stability and good financial performance. If these two factors are met, there’s a good chance the share price of the company’s stock will increase gradually.
Look at the leadership of the company. Are the senior leaders people who can be trusted to stay out of controversies?
How has the company performed in the past several years? If it’s a fairly new company, what are the revenue projections?
In general, there are several variables to consider when choosing a stock. You should invest in stocks only when you’re sure that the stock will increase in value over a certain period of time.
Get the Help of a Stock Investment Professional
As a newbie, there’s only so much you can do to choose a good stock. This is made harder by the fact that there are thousands of stocks to choose from.
Why do all the hard work when you can seek the help of an investment management professional? These professionals know the stock market like the back of their hand and can easily help you choose the right stocks for your portfolio.
That’s How to Pick Good Stocks
Knowing how to pick good stocks is the key to becoming a successful stock market investor. It’s not a thing of luck or magic. With proper research and sound investment advice, there’s no reason you shouldn’t find good stocks.
Keep tabs on our blog for more investment tips and insights.