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How To Figure Out What Stocks To Buy
Figuring out what stocks to buy is dependent solely and entirely on what you are aiming to accomplish with your stock investment. One example is if you were looking for a quick bang for your buck, and are also willing to take on an extremely high amount of risk, the penny stocks could be an alternative. When you are trying to find the most conservative investment and would like to get some sort of dividend payment, then one of the Dow Jones Thirty could possibly be the answer. There is certainly no simple answer to any investment, but you need to learn and recognize just what it really is you’re trying to achieve with your stock portfolio.
Diversification is one of the keys behind understanding what stocks to buy in any market cycle. If you are an ultra conservative investor, always keep about 60% of your holdings in individual stocks which have a proven history of paying dividends, 20% in different mutual funds, ten percent in cash and 10% in bonds. That’s a truly diversified portfolio for an individual who is interested in the conservative approach.
A risk taker might expect to put 60% in higher risk stocks, which might be about to develop a new trend, 30% in cash and 10% in ultra high risk stocks, such as the aforementioned penny stocks. In either case, both portfolios satisfy both investing criteria and they are both diversified. Understand that if you do not understand what a diversified portfolio means, you should either spend a little time studying it or get out of the game.
If you’re completely uncertain on exactly what to buy, or what investment approach to use, or even how much risk you’re willing to accept, you need to spend some time figuring it out. The best investment minds in the world were not born with this particular expertise, they learned it. They additionally accepted that their own philosophy is who they are and exactly what they’re about.
They made a conscious determination that they were either aiming to earn a few bucks for retirement and would stick with the Dow 30, or they decided they could take some risk and take chances on companies such as Research in Motion, who ten years ago still was traded on the Pink Sheets. Now they’re extensively known for being the firm that produces all Blackberry phones. It’s up to you, the individual investor, which approach you choose to take.
Never forget that you must always keep your emotions in check, and recognize that the truth is that this is actual money. Virtually any investment, whether conservative or risky, short or long-term, costs money. In addition, it is your own hard-earned cash that is at stake. Determine what sort of investor you would like to be, and just how much money you are able to risk, and that will ultimately determine for you what stocks to buy.
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