Discover how to find the best investments for new investors, plus how to fit them into an optimally balanced portfolio

Early in their investing careers, many beginner investors have only a vague idea of the value of building an investment portfolio. Ideally, they would learn how to invest by making a lot of money in a few shrewd stock picks, then switch to a conservative, well-balanced portfolio.

If you are looking for the best investments for new investors, our Successful Investor method can give you above-average results when you practice it on a consistent basis. If you think of and plan your investments as one portfolio, your investment results will become more consistent, less time-consuming, and more satisfying than ever before.

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Learn how to find the best investments for new investors—and experienced investors, too—with these key tips

We continue to think investors will profit most—and with the least risk—by buying shares of well-established companies with strong business prospects and strong positions in healthy industries.

Investors learning how to find the right stocks should look to tap the long-term growth that inevitably comes to well-established companies when they operate in relatively free economies. Here are the most essential elements for learning how to start investing in stocks.

• Think like a portfolio manager to find top stock picks
• Resist the temptation to copy prominent investors
• Use technical analysis as just one tool
• Look beyond a company’s share price at its fundamentals
• Focus on dividend-paying investments
• Practice patience with your investments

Recognize that a portfolio of the best investments for new investors will include the following criteria:

For successful investors, good portfolio management will include these 4 criteria:

• Spread your money out across most if not all of the five main economic sectors (Finance, Utilities, Manufacturing, Resources, and Consumer). The proportions should depend in part on your objectives and the risk you can accept.
• Balance aggressive and conservative investments in your portfolio, in line with your investment objectives, and the market outlook. Above all, avoid the urge to become more aggressive as prices rise and more conservative as prices fall.
• Good portfolio management also means balancing your investments geographically. Avoid focusing your portfolio completely on any one country or region.
• Market leaders and market laggards both deserve a place in your portfolio. Over long periods, high-quality stocks play leapfrog. Some of the lowest-risk, highest-profit buys you’ll ever find are overlooked or out-of-fashion stocks of high investment quality that are coming back into investor favour.

Use these factors to help pick the best investments for new investors

• Look for political stability. For example, mineral exploration is risky enough without the threat of expropriation or onerous taxes.
• Aim for well-financed stocks with no immediate need to sell shares at low prices, since that would dilute the interests of existing investors.
• Look for a sound balance sheet with reasonable debt.
• Watch for experienced management with proven ability to develop and finance a new business.
• Avoid stocks trading over-the-counter where regulatory reporting and so on is lax.
• Avoid stocks trading at unsustainably high prices due to broker hype or investor mania.
• Compare the market cap of the stock with the estimated value of its reserves, future product sales and so on. 

Know when to buy, when to hold, and when to sell 

It is easier to hold high-quality stocks that perform well over time. But we don’t recommend that you hold indefinitely.

We advise selling particular stocks when we feel the situation has changed and they no longer qualify as high-quality investments. We also sell if we decide that a stock isn’t as high-quality or well-established as it needs to be to cope with the challenges it faces. Of course, many of our sales are due to a successful takeover of a company’s stock, which generally results in a major profit.

In short, our strategy is “buy and watch closely.”

Of course, there are a variety of ways to build an investment portfolio. Some work better than others. Our Successful Investor approach has done well for our clients and readers over the past few decades.

There’s no easy answer to a buy-now-or-wait dilemma. At times it may pay to hold off—for instance, a company’s stock will often rise when it announces a stock split, then fall after the split takes effect.

In the end, our stock buying advice is that if a stock is truly worth investing in, you should be willing to buy it at current prices.

Use our three-part Successful Investor approach to find the best investments for new investors

1. Invest mainly in well-established, dividend-paying companies;
2. Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities);
3. Downplay or avoid stocks in the broker/media limelight.

What investment knowledge would you like to have as someone new to investing?

What are your goals as a new investor? Are you hoping to build a portfolio for retirement or are you looking at investing as a way to make additional income?