How to Research Stocks and What to Look Out For

Many of the monetization moves we make require doing our homework first.

When it comes to saving for a big purchase, research tells us it’s important to know the difference between a traditional savings account and a high-yield savings account. (Hint: the latter increases your coins faster.)

Or, when signing up for a new travel credit card, we’re naturally inclined to shop ahead of the cards that offer the best welcome rewards.

And when it comes to investing our money in the market, doing our research is equally important. You don’t have to be an expert to start buying stocks, but the more knowledgeable you are about the approach, the smoother your investment journey will be.

Here are some things to keep in mind when researching stocks.

Ultimately, people buy stocks with one end goal in mind: building wealth. But it is important to note here that wealth is not guaranteed. Investing in individual stocks carries more risk than buying bonds or putting money in an index fund.

When you start researching stocks, first know how much risk you can accept or your risk tolerance. Can you comfortably take large financial losses? Financial experts generally recommend that you only invest money in individual stocks that you are likely to lose, and since investment returns are usually maximized over the long run, only invest money that you can afford to lose. will not be needed in the short term.

So the money you want to use to pay off a home next year or for your child’s college education in the next 15 years is best put into different types of accounts – think high yield savings and account 529 , respectively.

Warren Buffett once said, “Never invest in a business you can’t understand”.

This may seem obvious, but you should remind yourself that you should understand what the company does, or the products it makes, before you buy it. After all, as an investor, owning its stock means owning a piece of that company.

For example, before betting your money on a software company that specializes in security and data analysis, make sure you understand how the world of cybersecurity works.

Understanding a company’s product is one thing, but understanding a company’s finances paints a bigger picture that an investor needs to see. A company can innovate, but is it making money that will make you money? Take technology companies as an example. You might understand and like the product (and even use it yourself), but how do they monetize their massive user base?

To dive into a company’s financial position, look up its annual reports. Publicly traded companies provide free annual reports to the public so that current and future shareholders can view the company’s performance and see what it has achieved.

You can usually find a company’s annual report on the company’s website, under the “investor relations” tab. Googling the company name and “investor relations” is also a shortcut that will get you to the right place. On this site you can also find information on the company’s quarterly earnings calls, which anyone can follow, as well as access analyst coverage of the company. .

A company’s historical record isn’t the only reason to buy (or not buy) its stock, but it can help provide some insight into what you can expect. .

Websites Google Finance and Yahoo! Finance allows investors to study historical data, such as price charts going back several decades. Users can also compare historical data of stocks with each other.

Note that past performance is no guarantee of future success – just because a company has performed well in the past doesn’t mean it will continue to do so in the future.

Before entering the complicated and risky world of stock investing, take the time to do your research first.

Start by understanding your risk tolerance, then move on to understanding what publicly traded companies do, what products they offer, how they make money, and how they have performed in the past. . Experts generally recommend that individual stocks make up only about 5% to 10% of your overall portfolio, with the rest put into less risky investments.

To determine which $0 commission trading platform offers the best service to consumers, Select narrowed the offerings down to an initial list of 10. We then analyze and compare each factor based on the following:

• Minimum account
• Types of Accounts
• Account and consulting fees
• Customer support
• Cost ratio of available investments
• Investment options
• Transaction fee
• Available technology, including mobile platforms
• Educational tools and resources

After reviewing the above features, we base our recommendations on the platforms that offer the most investment options, powerful educational tools and resources, user-friendly technology, as well as the lowest rates of fees and expenses. We also looked at each company’s customer support structure, communication methods, and available app reviews.

Note that with all trading platforms, there is no guarantee that you will earn a certain rate of return or that existing investment options will always be available. To determine the best approach for your particular investment goals, you should speak with a reputable fiduciary advisor.