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Friday, 10 November 2017

Things You Need to Know Before You Buy Your First Stock

If you are new for trading, then you may find difficulty in determining how much of your money should be in stocks, what type of stocks you should look for, or what common mistakes you must avoid. Keeping these things in mind, here is a post that will help all investors, who are getting ready to buy their first stock.

intraday trading tips

Your portfolio of stocks

There is no set-in-stone rule, but generally speaking, as you get older and closer to retirement, you should reduce your exposure to stocks in order to preserve your capital. As a rule of thumb, take your age and subtract it from 110 to find the percentage of your portfolio that should be invested in stocks, and adjust this up or down based on your particular appetite for risk.

Index funds and individual stocks

An index fund allows you to invest in many stocks by purchasing one investment. For example, an index fund gives you exposure to all 500 stocks in that index.
Index funds can be an excellent tool to diversify your portfolio and reduce your risk. After all, if your money is spread across hundreds of stocks and one crashes, the impact on your overall portfolio is minimal.

Number of stocks you must buy

Suppose if you want to buy only individual stocks then you must buy at least 15 different stocks across several different industries in order to properly diversify your portfolio. On the other hand, this may not be practical when you are just starting out. It is good to invest the bulk of your money in index funds, and buy one or two stocks with the rest, rather than buying lots of individual stocks. This takes most of the guesswork out of investing, while still allowing you to get some experience with evaluating stocks.

Dividends

Many stocks choose to distribute their profits to shareholders in the form of dividends, while others choose to use their profits to reinvest in the growth of the company. In general, dividend stocks tend to be less volatile and more defensive than non-dividend stocks. It is important to note that just because a company pays a high dividend does not necessarily mean that it is a better investment.

Get more such information from the technical analysts of Money Classic Research, who are experienced and well qualified in this field. They are capable of generating accurate intraday trading tips.

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