I wanted to continue with investment advice again; I am not a financial advisor, so my advice is still to talk with one or take my advice only so far as it makes sense to you. I have noticed an uptick of friends and family asking for investment advice or stock tips, so I want to do a few things here to identify how to analyze investments and differentiate strategies for investing.
First, do you prefer stocks or bonds? Stocks give partial ownership of a company may pay out a dividend but are mainly bought and sold by investors with the hopes of profit. Bonds are debt from companies sold to raise money and give buyers an interest payout. These are two forms of investments we can find and will discuss today. Investors and financial planners will tell you your investment strategy should be based on this basic understanding of the market. Depending on your age and risk profile you should allocate your investments accordingly. Older and less risk-averse investors are usually pushed towards more bonds as they as seen as safer and provide a steady income, younger or more risk-seeking investors towards stocks. But what is the big deal? Younger investors and risk-seeking investors have more time to make up for any losses older or risk-averse may not.
I use Vanguard and Robinhood and want to give some insight into accessing an investment option. My investment style is low risk as I want to build wealth and passive income. So many of the stocks I look into are either dividend earning or indexes of sectors like the Dow Jones, Russell 1000, energy, or finance. So when I analyze an investment, I ask for the P/E, 52 weeks high and low it’s five years and their competition. Their 52 weeks and five years of performance give you data to analyze their past performance and trajectory. Their P/E is the price per share divided by earnings per share this is important cause it lets you know the value of the company and how much you are paying for its performance. I use it to compare similarly priced stocks low P/E may indicate no lower growth and price stability v high which may have higher growth potential. I prefer lower volatility and guaranteed returns. I want to stop it here and let you look up a few investments and strategies.
Oh one last thing, one of the more valuable things Robinhood offers is Bulls and Bears analysis. That information gives you the pros and cons of every investment they have data on and their news segment gives you updates on the stock use them to your advantage.