What’s more important than how much money you have to start investing is learning how to pick the best stocks. Stocks have the potential for big gains if you know which ones to pick at the right time. There are two components to the right time: the stock itself and the overall market.
A stock could sport top-notch fundamentals, such as high Composite, Earnings Per Share and Relative Strength ratings. Use
as a guide. The company may clearly be a leader in its field, but it’s prudent to wait until the stock is breaking out from a
so you can stay on the correct side of the market.)
Let’s say you have $500 or $1,000 to start investing. Don’t try to reduce risk by buying 10 stocks. Concentrate instead on one or two potential winners. With $10,000, stick with three or four good stocks instead of a basket of names.
Suppose you have $10,000 and invested $5,000 of it in
, shares would have soared 210% to $7,750 less than two years later.
A Big Overall Profit
That initial $10,000 would now be worth $29,375. If you kept your losses in other stocks at no more than 7%-8% for each trade, you would be able to keep a lot of those profits. Always practice
the golden rule of investing
It’s never too early to start saving or learning to invest. The younger you are, the greater the chances to grow even a modest amount exponentially, as explained in this
A version of this column was first published on April 15, 2016. British American Tobacco acquired Reynolds American in July 2017. Please follow Gondo on Twitter at @IBD_NGondo for more analysis on top ETFs and growth stocks
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