Different types of stocks demand different types of strategies to be successful and with the tips below, you will be able to figure out the one that will suit you best.
Income stocks are about getting a consistent income from the company you decide to invest in. Normally, online investments are paid in form of dividends and even though they will be taxed, the investor is able to generate a consistent passive income from the stocks they bought. So, why does the company give dividends and why don’t they use the cash for themselves?
A company normally decides to distribute excess cash as dividends when the business operations do not require so much money to grow. This could be because of limited growth opportunities or the company opts to borrow cash instead of re-investing in the earnings. Once they give out the cash as dividends, that company is also able to maintain high returns on equity.
The investing strategy here is buying the stocks when they are undervalues. This is also known as value investing.
Growth stocks are some of the best because they have the ability to double and even triple in a given period of time. However, they are also quite challenging and you will have to work hard in order to see those major gains. Still, to be successful, you should look for those stocks with great Earnings Per Share Growth Rate while consistently growing sales followed by operating cash flow and its profits margins.
Speculative stocks are quite the stock investments because you can make 100% returns in no time or lose them just as fast. The return potential could be great because these are about penny stocks but in the same time, the risks are very high since there is no way of telling when to win or lose. This trade is normally for seasoned traders but the victims are normally the beginners. For this reason, if you are a beginner investor, it would be wise on your part if you avoided these stocks in the first place. Yes, there is a chance you could get very rich, but that chance is equal to the chance that you could get flat broke very fast as well.
The best resources
If you are new to investing and you have no idea how to invest in stocks. Here are some of the most practical things you can do in order to succeed in stock investing.
Find a great broker
Investing in the stock markets is not an easy task and finding a professional broker can be your best bet at winning. You should make sure that the broker you hire provides investing education services and that they could teach you all you need to know about the investments and the market. Most of the top brokers normally have beginner trainings for their new clients. These trainings normally include investor tips, email tutorials, online webinars as well as daily market updates. Some of them will also provide exclusive access to their online newsletters where the works of the major market analysts are published. Such resources will provide an investor significant help and enable them to grasp the essentials of the stock markets, stock trading as well as stock investing.
Online crash course
There are available online crash courses for beginner investors and you should take advantage of them. With such a course, you will get solid stock investment tips as well as lessons from the market gurus. You are bound to benefit immensely from them. Through these courses, you could also learn how to read charts, how to pick profitable stocks as well as how to analyze different market indicators. You will get stock trading manuals as well as many other resources that you can use once you begin investing. Actually, these will come in handy because you can always refer to them and they will guide you to benefits from the stocks markets.
In case you feel that you do not want to use do much money on formal online courses, you could also self-study and educate yourself. There are numerous stock investing websites offering free stock market pointers and you can also learn from them. As long as you make sure that you choose to study from highly reliable and reputable sites, you can be sure that you will get the right information.
When you self study, you can check out major financial institutions, government portals and investment banks where you will get educational resources about stocks. Ensuring success in the stock market as a simple investor could be achieved without much trouble as long as you have practical investing skills.
What to avoid
There are several things you also need to keep in mind to succeed in the stocks. Some of which are never to buy stocks as soon as the stock markets open. Stock prices are normally known to skyrocket as soon as they open so be patient and wait for a few hours or until the prices become stable enough.
Do not ever invest in money you cannot afford to lose because this is a risky business and you can certainly lose a lot. For this reason, if you feel that you are not sure about what you are investing in, try not to invest in it at all.
Do not buy stocks that you receive through your emails especially if you are investing in online stocks. There are numerous fraudsters online who are willing to give you run for your money and you will lose it even before you invest it. When you receive such emails, stay away from them because nothing good can come from them.