After years of thinking about investing in stocks, you’re finally ready to get started. While this process can be very exciting, it can also be extremely stressful and come without the concrete assurances that you may want. Nobody can tell you which stock will be the most profitable, or which one can withstand the test of time. One of the most common complaints Mark Matson hears from new investors is that they really don’t know where to start, or that they aren’t sure that they’re doing things correctly. While there are no secret methods for always choosing the best stocks, there are ways to have more confidence in your investment choices.
Have the right expectations
A lot of the anxiety that first-time investors experience can stem from having unrealistic expectations. If you assume that investing in the right stock will get you rich fast, you’re most likely going to be very disappointed in the future. Returns on your investments can take a long time to see, and you need to be patient if you want to actually reap any benefits. Don’t assume that you need to focus all of your time and money on one stock; it’s usually good to diversify, even in the beginning of your investment career.
Think like a business owner
If you want to get a good handle on your new investments, then view your stocks like you’re the owner of a business. Stocks aren’t just things that people trade – they represent ownership interests in companies. Manage your stocks like you would manage a business yourself. Read and analyze financial statements, and pay special attention to every yearly update that you receive. Keep abreast of trends in the market, and try to keep an open mind and use some foresight when it comes to the future of your stocks.
Whether it’s because of media hype or general popularity, it seems like there’s a new hot stock every month that promises to bring its investors wild riches. It doesn’t take a market genius to see that some stocks can have their value seriously overestimated. So how do you determine which have real potential and which are going to flop? There’s no one answer to this question. Before making any decisions, take a close look at the industry and see how likely the company is to do well. Has their progress been slow and steady or very sudden? When in doubt, always choose steady climbers with a record of stability, even if on a regional scale. If you still aren’t sure, avoid the stocks entirely and go for something more secure.