Investing opportunities created by COVID-19, access to low-cost trading platforms and social media action has attracted new investors to financial markets.
If you’re new to investing, deciding what to buy can be overwhelming. Which are the best stocks to start investing in and how do you choose them? Is it possible even to say that there is a "best" stock to buy? What you'll soon find with any investment advice is that there is always an upside and a downside to any decision – and nothing is guaranteed.
We’ve put together this brief beginner's guide to investing in stocks to put you on the path to building your portfolio.
Things to consider before buying your first stock
Have clear investing goals
Ask yourself questions. Why are you investing? What do you hope to achieve? Are you looking to build up your savings, fund your retirement or buy your first home? The length of time you have to invest and the reasons you’re investing will determine which types of stocks are the most appropriate for you to buy.
If you hold a longer view, you can try investing in growth stocks. If you’re investing for income, you might want to focus on dividend-paying stocks.
Some experts recommend setting out a basic business plan for your portfolio. It can be easy to get caught up in the latest meme craze, and having a plan is a good way to keep you on track.
Research and screen stocks
Successful investing is about more than jumping into the big names. It’s important to research stocks you’re interested in, to understand what the company does, its prospects for future growth and assess key levels for the share price. Have a look at some beginner-friendly stocks and decide whether they fit your objectives.
As you delve into financial markets, you’ll encounter a variety of trading strategies and technical indicators. Check out Capital.com’s free educational resources to help you develop your skills and improve trading performance.
Open a trading account
To buy and sell stocks you need a brokerage account. You should get to know what types of trading instruments you’ll have access to and how the fee structure works.
Best stocks to buy for investing beginners
To help you better navigate the market, we’ve created a list that some may consider the top eight shares to buy for beginners. These starter stocks to watch have been selected because they are expected by some observers to generate strong returns for investors in the coming years. So they can be bought and held without having to manage your position too closely. We've tried to give some indication of the perceived strengths of each stock.
It’s important to keep in mind that past performance is no guarantee of future returns, and you should never invest more than you can afford to lose. Whether the stock is a good buy for your portfolio depends on your personal risk tolerance and investing goals.
We suggest investors and traders exercise caution and do their homework before investing in any company. We recommend you do as much research as possible, taking into consideration the latest market trends, expert opinion, and fundamental and technical analysis.
Let’s take a look at Capital.com’s list of what could be the best stocks to invest in for beginners.
The technology giant has seen its share price increase by more than 400% in the past five years. It’s expected to continue its dominance of the personal electronics market, making Apple one of the best beginner stocks to buy. Apple held a 55% share of all US smartphone shipments in the first quarter of 2021, up from 46% a year earlier, according to Counterpoint Research. It held a 17% share of the global market.
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Amazon dominates the global ecommerce marketplace. Lockdowns during the COVID-19 pandemic have accelerated growth. The company reported a 38% increase in revenue and an 83.6% jump in net profit for 2020. Amazon is diversifying beyond online consumer goods to other high-growth markets, like streaming services, smart devices, cloud computing services and self-driving cars.
The century-old entertainment company shows no signs of slowing down. The Walt Disney Company’s films and TV shows appeal to a global audience of all ages. The company has reported an impressive performance during the pandemic, even as its amusement parks were closed and cruises put on hold. It launched a new streaming service, Disney+, and will broadcast a slew of new content as filming returns to normal and movies held back from theatrical release during lockdowns are shown.
Healthcare giant J&J is considered a relatively safe stock in any economic climate. It owns a range of health brands like Band-Aid, Listerine, Neutrogena and Tylenol. It also supplies pharmaceutical products and medical devices. Despite the volatility of 2020, the company continues to increase its quarterly dividend, and in April, approved an increase for the 59th consecutive year.
A real estate investment trust (REIT), Realty Income is a go-to for investors looking for regular, reliable income. The company pays its dividend monthly, which can help generate returns for reinvestment. It provides a relatively low-risk way to invest in the US real estate market, and is starting to diversify its portfolio of properties into Europe.
Digital payments company Square is at the forefront of several important fintech trends. It enables contactless card transactions in retail stores with its Square card reader; it allows users of its CashApp to transfer payments seamlessly to family and friends; and it’s investing in bitcoin (BTC). Users can buy and sell bitcoin in CashApp. The company’s CEO, Jack Dorsey, who founded Twitter (TWTR), said recently that it’s considering making a bitcoin hardware wallet.
The adoption of telehealth services accelerated during the pandemic as patients consulted their doctors virtually rather than leaving lockdown or quarantine to visit clinics in person. Teladoc merged with Livongo last year to expand its offerings and customer base. The company is positioned to capitalise on the long-term trend towards digitalisation. Telemedicine creates new opportunities for rural healthcare. Teladoc has scope for a strong international expansion.
Along with Mastercard (MA) and American Express (AXP), Visa dominates payment card transaction processing. The companies will benefit from the long-term shift away from cash and the growth in ecommerce. They have limited exposure to interest rates as they generate their revenues from processing fees. Visa has a higher operating margin than its competitors, which it’s maintained for much of the past decade.
The easiest way to buy shares in the companies is through an online trading platform. Sign up for an account with Capital.com today to start building your investment portfolio with an award-winning, CySEC, FCA and NBRB regulated CFD trading platform.
While it can be tempting to jump in on the latest meme stock, new investors should consider stable stocks that offer long-term growth prospects and rising income. In any way, in the financial markets from stocks to forex to commodities, there is no such thing as a safe investment. Every investment comes with a risk of losing money.