If you are going to invest in stocks, you want to purchase the best. Taking risks on lower-quality stocks is best left to professional investors. The average investor needs to choose relatively safe stocks to protect his or her investment.
Before you begin investing, you need to be certain that you are ready to do so. Make sure that all of your financial obligations are covered and that you are contributing to your retirement fund. You also need to fully fund your emergency fund before you begin to invest. The decision of how much to invest is always a tricky one; a good rule of thumb is to start by investing 10 percent of your disposable income and go from there as you get more comfortable making investments. Never invest so much that you can not meet other obligations, and remember that all investing is risky—there is no guarantee that you will get your money back.
The top five stocks for new investors are the five best stocks of 2012: Capital One, Microsoft, Hershey, FedEx and Alcoa.
Capital One is a credit services company that provides credit cards and secured loans to consumers across the credit spectrum. It is one of the few such companies that have weathered the economic downturn well. Capital One stock generally trades in the low fifties and has a return on investment (ROI) of 27 percent.
Everyone is familiar with Microsoft; the software behemoth has extended its near-monopoly worldwide. While Apple may be winning the competition when it comes to portable electronic devices, most people still prefer PCs and Microsoft Windows® and Microsoft Office® are used exclusively by many governments and large corporations. A share of Microsoft will cost you about $30 and the company has an ROI of 16 percent.
Chocolate consumption is growing around the world and so are the profits of Hershey and its subsidiaries. Even if you do not care for chocolate, consider investing in this maker of sweet treats. With an ROI of 12 percent it is hard to go wrong, even though the stock price averages around $70.
FedEx is leaving all of its competition in the dust; it is grabbing market share from every competitor, including the U.S. Postal Service. A share of the shipping company averages $85 and the company has a five percent ROI.
You may have never heard of this company, as it is not exactly a household name. Alcoa makes aluminum, a metal which is used in everything from soda cans to automobiles and airplanes. Demand for this metal is steadily increasing and so is Alcoa’s profit margin. The company currently has an ROI of two percent and an average share price of only $8.
Purchasing stock is only the first part of the investment journey. Once you have invested, you will need to monitor the performance of your stocks using either your exchange’s tools or those found on any number of financial websites, such as Forbes or Yahoo! Finance.
You will want to sell your investments when one of several events occurs, you have reached your investment goals (such as reaching retirement age), you decide the company is no longer a good fit for your goals and want to switch your funds elsewhere, or the company gets into serious financial trouble. Most companies recover from bad times, so a buy-and-hold strategy is usually your best bet.
Scott Gordon writes on behalf of www.iseecars.com where you can search for a number of new and used cars in order to assist you in making one of the most important investments of all.