What First-Time Investors Need to Know Before They Hit the Market

Stock marketing investing

What are the top stock markets to invest in for 2014? You’ll get plenty of different advice depending on who you ask. If you ping billionaire investor Warren Buffett for his thoughts, he might mention Wells Fargo as it happens to be his top holding. At the end of 2013, Wells Fargo was worth an estimated $21 billion — not exactly chump change.

But Kiplinger, a finance publisher based out of Washington, D.C., has an entirely different perspective for its top stock choice for the year. In a roundup from last fall, Kiplinger highlighted reliable companies with successful pasts in the market like Coca-Cola, Bank of American and General Electric as your best bets for stock market investing 101. However, it’s really not quite as simple as cherry-picking the most promising stocks and watching your portfolio grow.

MarketWatch.com suggests buying a low-cost mutual fund over an individual stock because of the guaranteed safety of mutual funds. Since they track large groups of stocks, the value of your investments remains more or less consistent instead of fluctuating wildly. Despite what you might think about the market, this is actually a good thing — at least for beginners. The more experienced you become with investing, the more you can afford to take bigger risks on individual stocks.

Take a look at Apple’s stock, for example. From 2006 to 2010, the Standard and Poor’s 500 (a leading market index) gained about 0.75%, while Apple’s climbed nearly 350%. As you can see, individual stocks bring with them the opportunity for bigger payouts. But you just can’t go gallivanting around the market choosing stocks on a whim if your aim is to create a serious, profitable portfolio. The answer lies in buying stock in what you know.

As MarketWatch points out, the dot-com boom of the late 20th century led to plenty of investors looking for the top stock markets to invest in. The technology was new, and plenty of burgeoning companies were providing it, so investors started gobbling up as much stock as they could — without so much as checking into how these new businesses planned to sustain themselves. In the end, they didn’t have great business plans, which meant investors lost a lot of money. That all could have been avoided by simply understanding the full scope of the stock.

Of course, hindsight is always 20/20, and foresight is much more difficult. Still, an investor in 2014 can benefit from those same rules. Buy smart and you’ll never worry you made a foolish investment. It’s not really about the top stock markets to invest in — it’s about understanding the right ways to invest in the first place. Helpful sites: www.tradegreeks.com

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