Purpose
There are three reasons that people become investors. They might want to put aside money for their future, generate an annual income or make some money now. Each investor type selects different stocks. Those planning for their future place value and select companies offering stable, long-term growth. The retired individual has greater interest in dividend payments, favoring a stock that pays profits as dividends to stockholders annually. This annual payment makes life simpler for investors. The third group involves those who buy stocks at the lowest price and trade as values increase, yielding a quick profit.
Funds
Many people choose stocks to buy now for a retirement account. The holdings of these investors might be in a 401(k) plan, a regular investment account or a Roth IRA fund. Other investors may choose money from savings accounts or CDs while looking for a better return rate. All have consequences on the income tax except the Roth IRA, a sheltered account that grows free of tax.
Setting up an Account
Stock market accounts can be set up in three ways, including:
- Managed Accounts. The individual contracts with a stockbroker that handles all details. The professionals sometimes consult holders before financing new investments or might just send periodic statements of current balances.
- Assisted accounts. These accounts require the stockbroker to consult with the client. The broker makes suggestions as to stocks to purchase now and give reasons as to why these are sound investments. The final decision lies in the hand of the account holder
- Do-it-yourself accounts. The investor takes care of all details for themselves. They make the decisions including the purchase of stocks online using their own computer or by calling an order desk of a stockbroker to place the order.
Investors find that opening their investment account includes some paperwork and the transfer of money into the account. When investments are bought, money is removed from the account and stock certificates added. When holdings are sold, money is placed back in the account to be available for other transactions.
Picking Today's Stocks
Part of the fun is deciding the stocks to buy today. This requires research and thought be put into the decision. Financial information regarding potential investments can be found in many locations. The following criteria should be focused upon in locating possible buys:
- Companies doing well in the current economy
- Growth industries
- What you use and like
- Hot products
Today's growth industries include healthcare, green energy and services for baby boomers. The growing concern over shrinking natural resources is causing innovative companies with solutions to bring big profits to shareholders. While startup companies may offer greater rewards, they also have a higher risk. It is possible to lose some or all of one's investment. Many investors attempt to limit losses by selling when stocks drop below certain points.
The aging population is responsible for an expansion of healthcare. More people that are elderly need more medical treatment. During their lifetime, the average woman spends more than $360,000 on medical care while the spending of men is at $260,000. Services and products for older people continue thriving. Selecting the correct stocks to buy in this industry now is profitable.
Investment strategies must be adapted to economic conditions to keep investors happy. During a time when money was plentiful, there was investment in luxury items such as a Winnebago. Now that money is tighter, the population is returning to a more frugal lifestyle. These economically slower times make auto repair shops, bankruptcy attorneys, beauty care and birth control companies investments that are more popular. During stressful times, a new shade of lipstick or fingernail polish can help women to feel pampered. Vehicle owners have older cars repaired instead of buying new. The expense of raising children makes birth control more popular. Bankruptcy by those unable to pay bills becomes more common.
The hot products of the day make excellent stocks to buy right now. Many of these products are those requested by children or used by teens. Imagine the profits of those who invested in the early Rubik cube or the early Cabbage Patch doll.
Investors also find that the products they use and like can guide their investment strategy. Investors may use many different styles to research opportunities. They have been known to spend time in busy stores watching the items people buy. Others might walk the aisles of stores to determine the products remaining on shelves and those that are sold out. After buying stock in the company, investors may promote the products the company sells to consumers, including friends and family.
It is not hard to select stocks to buy now if the investor considers what is selling along with the reason why. After deciding their reasons for investing, money to be used in investing and ways to handle investment transactions, they can have fun.
