Tuesday, 25 October 2011

how to invest in stocks

Whether you are an active investor or just looking for a place to park your retirement money, your best bet is with the stock market.  You can reasonably expect a 8-12% annual return over time.  That could end up being a lot of money if you compound those returns over a long time horizon.  You really can’t expect those types of returns from other types of investments.
It’s not difficult to learn how to invest in the stock market.  Even beginners can get started almost right away with the right investment strategy.  If you want to get started right away as you learn the basics, consider investing in a broad market index fund like the SPDR ETF, which is a vehicle that tracks the S&P 500 composite index.  You can also look at the Vanguard Total Stock Market Fund which tracks 3,000 stocks in an effort to match the broader US stock market.  Both of these index funds have historically produced the returns of 8-12% a year that I was talking about.

Finding a Financial Advisor

Before you do anything, you should find a financial advisor.  A good one will do far more than just give you investment advice about individual stocks.  They will help you create a comprehensive investing strategy that is based on your risk profile, time horizon and financial objectives.
You could go with a standard stock broker, but there are a lot of downsides to doing that if you are a beginner investor.  I would look for a fee based investment advisor that you can trust and feel comfortable with.  Some of the larger fee based advisory firms are Edward Jones and Ameriprise Financial Advisors.

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