Locating the best stocks for investment

by ETF Base on September 21, 2018

Investing in the stock market is a task that can be highly lucrative if done correctly. However, it comes with a whole host of risks – and one of them is the risk that you won’t choose the right stocks or bundles of stocks in which to tie your cash. Luckily, you can mitigate this risk with a bit of strategic planning and hard work. While there are never any guarantees in the world of investment, it is possible to reduce the chances that your stock market move will go wrong.

Diversify your portfolio

One of the main pieces of advice that an investment advisor will almost always give their clients is to diversify. This means avoiding placing all your eggs in one basket, and instead choosing a variety of stocks to reduce risk. Say you invest in one stock: your gains will be huge if it moves successfully, but you’ll lose everything if it crashes and burns. However, if you invest in 100 stocks, then 40 might crash and 60 might grow. That way, you can use the gains from the 60 to replenish the losses of the 40 – and also make some profit on top. There are very few circumstances in which it doesn’t make sense to diversify, so it’s important to take the time to craft a varied portfolio.

Do your research

There’s a high degree of interest in the world of stocks, and this is something you can use to your advantage. It means that newspapers and investment websites such as the New York Timesand Forbesregularly publish details of which stocks the writer recommends you buy, sell or hold – and while you don’t have to follow their advice, you can at least use it to make informed decisions. Investing in access to a feed that provides everything you need to know about stocks this week, meanwhile, is another great way to make sure that you have what you need at your fingertips.

Consider a tracker 

A portfolio of well-chosen stocks and shares works for some investors, but there are other ways to invest in the stock market, and it pays to research them all before making decisions. One alternative is an index tracker fund: this asset doesn’t invest in one stock or another, but instead “invests” in the performance of a stock market as a whole. If, say, the NASDAQ rises in value and you have a NASDAQ index tracker fund investment in place, then you’ll profit – and you’ll lose if it goes in reverse. If you believe that an overall economy or market will rise but you’re not certain about specific shares, then this may well be the right move for you.

It’s clear, then, that investing sensibly in the stock market can be done, as long as you carry out the appropriate research. By looking into other options such as portfolio diversification, index trackers and more, meanwhile, you’ll be able to give yourself the best possible chance of crafting a stock portfolio that provides you with a decent return for the years ahead.

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