How to Invest in Stocks: A Step-by-Step for Beginners 2020
Before you buy shares, you need to understand why you're doing this. It is clear that your goal is to make money, but how much and at what time? And what will you do with the money? Perhaps you will think "why is it important to know before you buy shares"? The fact is that you can buy shares of the Coca-Cola company and receive 10-15% of annual income or you can buy shares of a biotechnology company for the development of pharmaceutical and cosmetic products and earn more than 1,000% per year. Many believe that investing in Microsoft or Google shares is reliable, but these companies already cost billions of dollars, so what do they need to do to double the price? Let's start with the obvious - dividends. This is certainly not the main way - dividend return is not very high, but as an example: the value of one share of Procter & Gamble Co - 66.20 dollars, and dividend return + 3.17%, i.e. 2.1 dollars. Therefore, by buying 15 shares for $1,000, you can get your 31.5 dollars. If the shares have grown by 20% during the year, plus 3.17% will be a great bonus, especially this money you can reinvest and next year you can get even more profit in monetary terms. Using this type of earnings, you can have a stable income, which will increase every year.
Popular strategies for investing in stocks
Buy and hold. The essence is simple - buy shares and keep them until the rate rises. The strategy is long-term, so you will not earn fast money, but correctly assessing the potential of the chosen company, you can get a good income. Accumulation. A bit more complicated - you need to gradually accumulate an investment portfolio, buying a certain number of shares and reinvesting dividends. For some years the portfolio formed based on dividend profitableness and savings will bring nice returns. Catch a wave. The expected profit is higher, but the strategy is riskier. The essence is simple - we wait for the crisis, buy cheap, and after the crisis, we sell expensively. It's a primitive description of the strategy, but it's understandable. Of course, the principle of strategies is not described in professional language - it's just information for reflection, which can lead to a serious economic analysis of the financial market.
Is now a good time to buy stocks 2020?
Taking into account the worldwide selloff the answer is yes – it`s high time to buy stocks. Of course, the coronavirus problem probably won't go away anytime soon. However, as others focus on the uncertainty of 2020, it is time to look at 2021. By that time, today's fears will have gone away. Therefore, perhaps ironically, revenue projections for 2021 may now be more relevant than for 2020 in determining what to buy and at what price. Given the fact that most stocks have declined significantly in the last few days, it is obvious that an investor's favorite stock is a good choice. While the uncertainties surrounding the coronavirus are still with us, a dramatic sell-off could be a necessary full adjustment. If so, then next time we will be interested in the opinion of what goes beyond the coronavirus period. This predictive analysis could put us back on our growth trajectory. However, we should not expect a simple return to the pre-crisis growth of the stock market. Several issues need to be resolved. It means that the next market trend may differ from the previous one. Therefore, the focus on blue-chip stocks at the moment, like in the Industrial Average Dow Jones, should offer participation in the growth, as well as a shift towards value and contrast. The shift to a more focused approach may come later.
What is the best performing stock of 2019 - 2020?
Naturally, we should start with Tesla. The electric car manufacturer, headed by eccentric CEO Elon Musk, has a loyal fan base - and for those who have been prudent about buying shares, this loyalty has paid off. The price of Tesla shares soared by 36 percent and reached $917 in the middle of February. In general, the price of these shares has more than doubled since the beginning of 2020. Even though the company suffered losses throughout 2019, the car manufacturer managed to increase profits for the second consecutive quarter. Many analysts believe that Tesla is beginning to exercise tight control over its finances and are impressed by the ambitious growth plans - "Giga factories" located in Europe and China are going to produce models at a lower price for consumers on both continents. But is Tesla a good investment? That's a difficult question to answer and it's very important to do your analysis - not least because the company's share price has cooled down recently - but strategists believe that Tesla's dominant position in electric battery space means it's well-positioned for the upcoming turnaround away from diesel and petrol cars. Finally, let's look at the price of Amazon shares. The e-commerce giant, which is constantly a Wall Street favorite, is growing 10.3 percent a year, from about $1,900 to almost $2,100. The latest jump followed the quarterly profit, which confirmed that the company has exceeded expectations in many areas. Amazon Prime, which provides fast delivery of products - often on the same day or within 24 hours - proved to be a special Christmas gift. Is Amazon a good investment? It depends a lot on whether you think the e-commerce giant still has room for the stock price to rise, given how it trades at record high levels. And that's where we are. There is a lot of uncertainty ahead of us in 2020 - the coronavirus, the U.S. presidential election, and other factors are worrisome - and with the year barely beginning, it is possible that hot stocks have not yet reached their breakthrough point. After all, few could have predicted that Tesla's box office returns would return in February 2019.
What are the best stocks to invest in right now?
The biggest effect of the coronavirus outbreak was in China, hitting Apple with a double curse. Not only many of the company's products are manufactured in the Middle Kingdom, but the country also represents Apple's second-largest consumer market, behind only the U.S. The company was forced to close its retail stores in China in response to the health crisis, although it has since reopened 30 of 42 locations. There's no doubt that Apple will feel pain in the short term. However, if you step back and focus on a longer period of time, it suggests that the company can thrive. In early 2020, Apple reported record results for the first quarter. The contribution was made to all product lines of the company, with the largest contribution being made to the iPhone. The company's revenue grew to a record $91.8 billion, 9% more than last year, due to strong demand for the iPhone 11. The company also achieved record growth in both the service and home apparel and accessories segments, which grew by 17% and 37% respectively. This is not the only reason to buy Apple shares before the panic caused by the coronavirus subsides. Apple is trading at a discount of almost 11% from its recent high. The company also pays out dividends, which currently bring in about 1%, while using less than 25% of its profits to finance the payments. If history is any indicator, the company should announce the next dividend increase in April during its next quarterly earnings report. It is also worth noting that Apple is buying back shares, reducing the number of its shares by 25% over the last five years.
Last month Disney announced that to stop the spread of coronavirus, it had to close its two theme parks, Shanghai Disneyland and Hong Kong Disneyland, during the usual peak season - Chinese Lunar New Year. The company said the move would reach the bottom line of about $175 million. That's not the only thing that comes to mind for Disney shareholders. Long-time CEO Bob Iger announced this week that he will resign while retaining his role as executive chairman until the end of 2021 when his current contract expires. Iger hands over the baton to Bob Chapek, who has successfully managed the parks, experience, and Disney products segment, so he is leaving the company in good hands. Even in the face of these problems, Disney is in a good position to recover from the health crisis. Speaking of Disney+, the debut was a blockbuster that attracted 28.6 million subscribers in less than two months, prompting the company to accelerate the launch across Europe and India. Hulu and ESPN+ have also benefited from the Disney+ package, adding 1.7 million and 4.1 million subscribers respectively since September. Disney shares are currently being sold at an 18% discount to their recent high and boast a generous dividend of 1.3% and a payout ratio of only 28%. This gives investors enough incentive to disable the coronavirus outbreak.
One thing to emphasize here, especially for new stock traders - investment is a life-long game. Take your time! There is no reason to rush to the stock market. Start with a small amount to invest, keep it simple and learn from each and every trade you make. If you feel like an emotionally charged trader, then passive investing in a common market with a simple index fund is likely to be the best choice.
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