Investing in stocks
A lot of movies and media often glamourize the lifestyles of the most successful stock traders. Heck, just watch Wolf of Wall Street and you might feel like becoming one tomorrow. Indeed, it is now easier than ever to become a stock trader/investor because everything can be done online, even right from your smartphone. So, whether you intend to become the next billionaire or just interested in modest returns, investing in stocks may be just for you. At BuyStocksEasy, we help all our visitors choose the best performing stocks quickly so that they can start earning immediately. Today, you will learn about how you can get started and some of the stock options available.
How to start investing in stocks
To make an investment in stocks, the first step is to find a good broker for you. One broker may be suitable for another person, but not for you depending on the quality of their services. Some of the things to consider include commissions, the number of stocks, margin, capital requirements, trading platforms, etc. These factors and more have been discussed in further detain right here on BuyStocksEasy to ensure you never get disappointed. Once you know how to identify the best trading brokers, you’re good to go and become an investor. Of course, just because you can buy stocks does not automatically mean success, but we’ve still got you. Our experts at BuyStocksEasy constantly analyze stocks from all over the world to identify exciting and promising opportunities.
Choosing the right stocks to invest in
All company stocks are not the same, and there are certain categories they can be classified based on their attributes. All stocks you find on the BuyStocksEasy website can be classified into various categories, and it wouldn’t be possible to describe all of them in this single post. In the end, though, it comes down to your particular intentions and what you expect to gain from your investment.
By definition, penny stocks are those stocks that are traded at under $5 a share. They can either be shares of a small company or a once large corporation that is heading toward bankruptcy. Usually, the former is the case because a startup will have a lower valuation, but there have also been giants who fell from glory. One such instance was that of Ford Motor Company whose share price fell to $2 following the 2008 economic crisis.
The obvious advantage with penny stocks is that they are cheap, which could potentially mean huge returns. Consider one such stock as a single stock of Monster Beverage Corporation was going for $0.07 20 years ago, and each is now worth $52.88. That means that, if you had just 1,000 shares back then worth $70, the investment would now be worth almost $53,000. Remember, that is without taking into account the dividends and possible reinvestments accrued along the way.
On the other hand, penny stocks are incredibly volatile and risky to invest in. For example, due to the low share price, some traders may manipulate prices through pump and dump schemes. They buy up plenty of stocks in a short time, making investors believe it is rising in value, only to sell their shares after gaining enough profits. Since there is often little information about the companies, investors can be very likely fooled into the scam. Aside from that, these stocks are risky because of the high volatility in stock prices.
These factors make such stocks risky to invest in and only suitable to investors with a high risk appetite. If you don’t mind taking some high risks, then checking out more penny stocks on the best trading brokers will give you plenty of penny stock options.
S&P 500 and other stock indices
The S&P 500 index is perhaps the most popular stock market index. However, it is important to remember that it is just a measure of market performance and not an actual asset. Basically, you can’t actually buy an index such as the S&P 500, but you can invest in it through a mutual fund or ETF. These financial tools track the value of various indices and give rewards based on the changes in price of the underlying index. There are many stock indices around the world, all of whose values are tracked by various mutual funds.
Compared to other investment tools, stock market indices are some of the most stable and productive investments around. The S&P 500 index in particular has recorded significant growth over the years. Over the past decade, the index has grown by almost 240%. During that same time, gold prices only grew by about 50%, so it’s obvious which investor would be wearing a wider smile. They are also favoured for being extremely stable over the long-term. Even though indices may experience some downturns, in the end they appreciate in value. This is why even billionaire investor Warren Buffett told CNN he would rather buy the S&P 500 over government bonds.
The only problem is that you don’t get any dividends from the investment, but in return you can expect massive returns with very little risk. It’s the ideal investment for someone interested in creating a retirement investment without a need for passive income.
These are the stocks whose companies issue regular dividends to every shareholder either quarterly, biannually or annually. Although the value of the stock itself does not grow by a large margin over the years, consistent and often rising dividends make them a good source of passive income. Using BuyStocksEasy calculators, it was possible to estimate the amount of passive income one could probably earn in a year by investing in Coca-Cola stock today at current growth estimates. A mere $1,000 investment complemented by monthly increments of $100 for 30 years and reinvestment could turn into a $110,000 investment with a $6,000 annual dividend.
Because dividend stocks are usually financially stable companies, these stocks carry very little risk in investment. However, the returns from the rise in stock price is also often low and unremarkable. Take Coca-Cola, whose stock price has fluctuated between $44 and $20 for the past two decades. Investors, though, have the luxury of earning passive income, making it the best option for someone planning on a passive income after retirement.
These are a bit of a new niche because the industry has only become recently legal. On a positive note, the cannabis market has been booming with medical dispensaries and recreational shops cropping up in the US, Canada, and other countries. In fact, the market is expected to grow at a compound annual growth rate (CAGR) of 24.9% from 2017 to 2025 to be worth $146.4 billion. Clearly, there is a lot of upside potential, but so is the risk. The market is still very volatile with plenty of moving parts, but by picking either one of the top 5 performers discussed on BuyStocksEasy, you could be on the safe side and on the line for a fortune in the future.
Not everyone is interested in waiting decades to realize profits, some of you may be too anxious for the big payout. The good news is that growth stocks are just for you. These are the kinds of stock that appreciate rapidly over a short period of time before decelerating and stabilizing. For comparison, just look at what happened to cryptocurrencies. The trick is to get in early during the upturn and sell your shares at the best time. It is a lot more difficult to spot the best growth stocks because they come around seemingly randomly. However, with the help of experts such as we at BuyStocksEasy, you can always be on the nick of time.
Investing in small cap stocks
Small cap stocks are simply those companies with a market cap between $300 million and $2 billion. They are composed of companies with a high share price because they have a limited number of shares. Institutional investors sometimes make large purchases of these small-cap stocks, which leads to triggering the SEC filing requirements and raising the stock price. For an individual investor, though, this may not be a very profitable venture in the short-term because the high price tends to keep investors at bay. Nevertheless, stock-splits occur over time, leaving investors holding a lot more stock than they had initially. That makes them ideal for investing over the long-term as the company grows in capitalization, especially if managed properly.