Finding The Best Stocks - A Beginner's Guide

If you're new to the stock investing game, you're probably wondering which way to turn for advice on finding the best stocks. WIth so much information about the stock market out there, how can you sort out the wheat from the chaff, and figure which stocks to buy?

Although it can be a daunting task, there's usually a clear path to investing in the best stock for you.

Start by asking yourself questions, in order to determine your investing goals:

Are you in it for the long term, or will you need to create a passive income that you can live on relatively soon?

What's your "risk profile"? Do you want to be more aggressive and invest in growth stocks, or do you want to preserve your capital first, and build your portfolio's value more slowly?

How hands-on do you want to be? There are investors who trade stocks every day, executing their own orders, usually with an online discount broker. There are also many investors who just let their financial advisors choose and make their investments for them.

One thing to remember here is that doing your own online stock trading and stock analysis can be very time consuming, to say the least. So, if, like most people, you already have serious time commitments, such as a full-time job, or family, trading stocks yourself may not be the best way to go.

On the other hand, if you have some time to devote to learning about stocks and investing, it can be a fascinating way to "earn while you learn".

Some fledgling investors have found success by joining "investment clubs", where they share investing ideas and knowledge with other club members.

Other investors subscribe to investing newsletters and blogs, where they can become informed about the stock market, and pick up information about specific stocks to buy.

Other investors will buy mutual funds, hoping to benefit from the expertise of professional money managers. There is a vast array of mutual funds available to investors these days; there are growth funds, value funds, large cap, small cap, fixed income, geographically oriented funds, and many, many more.

No matter how you go about investing, there is one simple rule that you should try to follow: Always try to diversify your holdings. Admittedly, this can be hard when you're just starting out, with a small amount of capital, but, most financial advisors will tell you this same thing - try to "spread it around" if you can.

For example, if you're thinking of buying a certain stock, maybe try only buying half of the quantity of shares you want, and invest the balance of the money in another stock, or fund that you've researched.

Speaking of research, any advisor will tell you that good research is the backbone of successful investing. Before you buy stocks, you should always research them first, and have a valid reason for buying them, just like anything else. Most of the online stock trading discount brokers now have free professional stock and investing research available to their customers.

An easy thing to do before you start to buy stocks online, is to do a web search on the company. Most companies have websites, with investor relations sections, that will give you their financial information and latest events.