Is the stock market heading for a top? Many folks are interested in stocks to buy, but are worried we may be heading for a top. Read on in the article to learn tips for picking a stock and to see if we’re heading for a top.
First Things First
If you’re going to be investing the in the stock market, first things first. Only invest with money you can afford to lose. You should assume if you’re investing that your money will be locked up for five years or more! The last thing you want to have happen is for a stock you own to go down in trading price the minute you need to sell it to pay for an emergency!
Picking Stocks is Not for Everyone
Warren Buffet – one of the most famous investors – says that most people like you and me should invest in low-cost stock market index funds. They are easy to understand – and they are set it and forget it. So, if you’re looking for something simple, look no further. Purchase SPY and move on!
Still Interested in Picking Stocks?
If you are looking for larger returns and are willing to take on larger risk of a downturn, then picking stocks could be for you. Some of the biggest returns you can imagine come from folks who picked their own stocks. Just imagine purchasing Netflix in its early days. It is up 26,450%! A $5,000 investment years ago could be worth over 13 million dollars today! Do I have your attention?
OK – here are a couple simple tips for picking stocks to buy:
- Check your emotions at the door – investing isn’t for the faint of heart. Ensure you won’t sell the moment the stock dips in value.
- Pick a good company – not just a good stock symbol.
- Know your risk tolerance – how much of downturn can you stomach before you panic sell?
- Invest gradually – not put all your money into one company and all at once. Spread it out over time.
- Avoid over-active trading – you are NOT a day trader! Repeat that phrase after me!
What About the Stock Market Being at an All-Time High?
You might be wondering why we’re writing an article about picking stocks when some are saying we’re getting ready for a crash. The truth is, no one knows when the market will make the next correction (go down). I remember folks talking about the market going to go down in 2013 right after a big announcement from Janet Yellen. Image how much gain you would have missed out on if you would have been waiting for that dip these past 7 years!
So, don’t let the idea that the market is at an all-time high deter you from investing. No one knows what the future holds, or how much higher the market could go. Simply invest a bit each month, and don’t worry about it. When you’re ready to retire down the road, you’ll be glad you invested!