Investing

How to Choose the Ideal Stock for Your Portfolio

There are thousands of publicly traded companies to choose from; so how do you know which stocks are ideal for your portfolio? The short answer: The majority of your stock should be financially healthy businesses with healthy earning growths, according to CnnMoney.com. The good news is that this criteria narrows down your choice from more than 6,000 companies to only about 200.

When creating a stock portfolio, the key is to create a well-balanced collection that you will be holding on to for a long time. After all, it’s important to meet your long-term financial goals and earn serious money. How many businesses should you invest in? When choosing stocks, CnnMoney suggests selecting about 15 to 20 companies. In addition to owning the right number of stocks, make sure they are spread out among more than five to seven different industries. But don’t worry; you don’t have to purchase all 20 stocks at once.

Most people want to invest in stocks to save money for retirement. As a long-term financial goal, your well-balanced stock portfolio should provide you with a total return more than 10 percent, which is the historical market average. If your portfolio averages 10 percent to 14 percent return over the next 15 to 20 years, you can enough money to reach your financial goals, including a nice retirement fund.

In addition to selecting the right number of stocks and making sure they are across various industries, it’s also important to select stocks with better than average growth rates and modest valuations. Avoid high-growth stocks because they are usually super expensive.

Guest blog post published by Plan B International, an experienced real estate firm located in Florida. To get more information about investing in the Miami and Florida market, please visit Planbinternational.com.