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What stocks should I put in my portfolio?

Hi! My name is Michael and I am very interested in the stock market. I want to look at different stocks to see what I should get. I would really appreciate some help with setting up my portfolio. #business #finance #college #marketing


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Nicholas’s Answer

Hey Michael! First off, I am not a financial professional and this should not be taken as financial or legal advice. The general advice most advisors will give is to not invest in individual stocks, and rather to "dollar cost average" into total market index funds. Many brokerages, like Vanguard and Fidelity, offer such funds. The idea is to buy $x per week of these funds, which allow you to get the "average" of the total market. Research has consistently shown that individuals do not beat the market by picking specific stocks. Some do, sure, but it's often down to luck and does not hold up over the span of a lifetime.

Eventually, when you have more money, it can make sense to diversify into individual stocks. At this point, it's probably smart to speak to a professional to get their advice unless you want to make stock investing your hobby and passion. Along the way, if you really love a specific stock, it's totally fine to put some money into it. Just don't go "all in"...it almost never works out the way you hope.

1. Save up enough cash to cover 3 months of expenses
2. Start dollar cost averaging into total market index funds
3. Don't think about anything else until you have tens of thousands in the market minimum
4. Talk to a professional financial advisor (with fiduciary duty) about how to diversify your portfolio to meet your specific goals

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Mark’s Answer

If you're looking at it from a "hobby" perspective, there are web sites that let you build portfolios without actually owning the stock. You could give yourself a starting fund of, say, $25,000 to play with and see how much you can grow it.

But with real money, yes, funds are the better way for most individual investors in my unprofessional opinion (my wife and I have substantial retirement savings, and NONE of it is in individual stocks).

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Ed’s Answer

Never take advice from anyone else on a specific stock...don't try bulletin boards or other common forums. Ask yourself why if someone knows what they are doing would they be spending time posting. Take a simple course and learn investing tools to help you read reports. Mary Buffet, Warren's daughter wrote an easy to understand book on Financial reports as well as several others. Look at companies that have products you are interested in. Always have an exit plan and stick to it. Emotions will almost always cost you money. If you don't want to do the work and take risks, then the index funds previously mentioned are a good passive way of investing. IN that case you can look at the index funds largest holdings and start research companies on their list for practice.

Ed recommends the following next steps:

Read books from notable investors like Warren Buffet or his daughter Mary.
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Many community colleges have low cost short classes.
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