Stock Market

Picking the Best Stocks for Your Portfolio – 10 Tips

Building a good stock portfolio requires the investor to carefully choose the best stocks that will create a balanced and diversified portfolio.

Start with Low-Growth, Large-Cap

Low-Growth, Large-Cap stocks aren’t going to make any investor rich but they will provide a save investment that, when chosen carefully, will provide consistent income to the savvy investor.

Find Great Dividend Paying Stocks

Preferred stocks that consistently pay above average dividends provide another safe haven for investors, and provides consistent, passive income.

Consider Some Cyclical Stocks

Cyclical stocks, those whose price fluctuates with economic upturns and downturns can be great (short term) additions to your portfolio when bought during a downturn and sold during an upturn.

Look into Value Stocks

Value stocks, those who many investors may consider to have a true value higher than their current selling price, can be bought while they are still undervalued and sold once they reach, or exceed, their true value. Together with cyclical stocks, value stocks represent moderate risk, with better then moderate potential return.

Pick Up Some High-Growth Stocks for High Returns

Most experts agree that it can be a good idea to include some high-growth stock, which offers the potential for high returns. Along with the high potential return, high-growth stocks carry with them high potential risk.

Don’t get Married to any Stock

No matter how much you love a particular stock you will never be able to keep the best stocks in your portfolio if you get married to a stock and refuse to sell it when it’s obviously time to let it go.

Consider Adding Some Bonds

A well balanced and diverse portfolio should always have a few bonds included in them. They provide the safest investment, and while they won’t give you the highest returns they will provide a nice passive income, often better than simply putting money into a savings account.

Consider Adding a Few Penny Stocks

Penny stocks are incredibly risky investments but offer some unbelievable potential returns. While not for every investor, they can provide a small, super-high-growth portion of your portfolio.

Pick Up Some Small-Cap Stocks

Small-cap stocks that are not necessarily high-growth can provide, along with other moderate risk—moderate return stocks an interesting addition to your portfolio.

Take Advantage of Your Companies Stock Incentive Program

This last one should be obvious, but not everyone takes advantage of company stock incentive programs. If your company offers a stock incentive program the savvy investor will take advantage of it, just be sure to check SEC rule 144 before you try to sell shares obtained in this way.