You’ll be preparing your portfolio for the future if you follow our advice on stock investing for beginners
If you ask investors who have a few decades of successful investing behind them, few, if any, will credit their success to any one investment or investing technique. Instead, most will talk about the value of everyday qualities like patience, consistency and a healthy sense of skepticism—in short, the kind of qualities that bring success in all aspects of life, not just investing. This is the key to stock investing for beginners.
These qualities help you apply our three-part TSI Network formula for investment success: invest mainly in well-established, dividend-paying stocks; spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources; Consumer; Finance; and Utilities); and downplay stocks in the broker/media limelight.
Our first new investment advisory in 15 years
Chances are, you’ve done well with some dividend stocks. Now you can do a lot more. You can build a much more powerful portfolio with the most successful dividend stocks.
We have developed our own exclusive proprietary rating scale to answer one all-important question: will a stock keep on paying, and raising, its dividend?
Our new Dividend Sustainability Ratings are only available in one place—the first advisory we have launched in 15 years, TSI Dividend Advisor
Approach all investments with a healthy sense of skepticism
This can help keep you out of fraudulent stocks that masquerade as high-quality stocks. It will also keep you out of legally operated, but poorly managed, companies that promise more than they can possibly deliver.
Stock market research tips for safe and profitable investing
Stock investing for beginners can be much more profitable with these stock market research tips that will help you cut risk and increase profits in your stock market portfolio. We’ve long recommended these tips:
Look beyond financial indicators
Think like a portfolio manager
Hold a reasonable portion of your portfolio in U.S. stocks
Give your investments time to pay off
Stock investing for beginners: Consistency is crucial
You can’t succeed fully by applying our three-part formula three years out of four. If you try to do that, you run a serious risk of abandoning the formula when risk is at a peak. That’s when our formula serves you best, and failing to adhere to a sound investing approach can do the greatest harm to your net worth.
If there is one piece of personal finance advice you should immediately implement, it’s to have a disciplined plan for saving during your working years. This, above all things, can set you up for optimal investment gains.
Stock investing for beginners: Losing patience can cause you to sell your best choices right before a big rise
All too often, investors buy a promising stock just as it enters a period of price stagnation. Even the best-performing stocks run into these unpredictable phases from time to time. They move mainly sideways in a wide range for months or years before their next big rise begins. (Stock brokers often refer to these stocks as “dead money.”)
If you lack patience, you run a big risk of selling your best choices in the midst of one of these phases, prior to the next big move upward. If you lose patience and sell, you are particularly likely to do so in the low end of the trading range, when stock prices have weakened and confidence in the stock has waned.
Stock investing for beginners: Utilize registered savings plans early
Our investment advice is that you should take advantage as early as is practical of all registered savings plans—RRSPs, TFSAs, etc. RESPs are particularly attractive, due to the government grants that come with them.
Stock investing for beginners: Seek dividends in your investments
If you’re new to investing, one tip we share often is to invest in companies that have been paying a dividend for 5 or more years. Dividends are typically cash payouts that serve as a way for companies to share the wealth they’ve accumulated. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Typically these dividends are paid quarterly, although they may be paid annually or even monthly as well. Canadian citizens who own shares in Canadian stocks that pay dividends will also benefit from a special tax break they may be eligible to receive.
Stock investing for beginners: High debt hurts growth
When you’re researching stocks, you need to know how much debt they’re holding. Companies with a lot of debt have a hard time recovering from an economic downturn.
The more manageable the debt, the better. When bad times hit, debt-heavy companies often go broke first. Especially ones that also keep trying to allocate part of their cash flow to paying dividends.
What do you think about these tips on stock investing for beginners? Do they match with your own investing strategies? Share your thoughts with us in the comments.
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