How to start your investment portfolio
Building a winning investment portfolio is easier than you think. Here's how to get started if you're just learning how to invest.
1. Look around you
One piece of advice for beginning investors is to buy stock in companies you already know and like.
Are you into fitness? You might want to research Nike (NKE +0.23%) or lululemon Athletica (LULU -2.96%).
Do you often eat at Texas Roadhouse (TXRH -1.65%) or McDonald's (MCD -2.37%)? Shares of these companies might be good picks for you.
Were you impressed with the theme park operations when you visited Disney World? Or have you seen every Pixar movie ever made? Then check out The Walt Disney Company (DIS -0.56%) stock.
You should consider investing in businesses that play a role in your own life because those are companies you already know something about. You can invest more confidently in familiar brands than in companies you've read about but don't really understand. Investing in small-cap and mid-cap companies that you're familiar with but that aren't widely known is a way to get in on great companies while they're still growth stocks.
Think about what innovative products or services are meeting your needs, or those of your family or community, and offer great customer service. Those companies could be the next Netflix (NFLX -1.74%) or Airbnb (ABNB +0.94%).
2. Do your research
It's not enough to know or even like a company; you need to have some confidence that the value of the company is increasing over time. To find out what you need to know, look at the company's financial statements.
While all publicly traded companies post their financial performance results online, what's published by the companies may be confusing for many investors. But you don't need to be a financial professional to read through a few quarterly and annual reports to ascertain whether a company is increasing its revenue, profit, and cash flow. Reading these reports can give you both a qualitative and quantitative sense of how well a company is performing.
