How to Invest in Stocks With Confidence

Investing in stocks is a common way to grow wealth. But for beginners, it can be intimidating. If you are ready to give it a go, the first step is to assess your risk tolerance and financial goals. Doing so can help you build a portfolio that aligns with your comfort level and could boost your confidence.

How to invest in stocks with confidence by determining your comfort level with stock market volatility. You may be able to handle more ups and downs with a lower-risk investment, such as bonds. But you might prefer the higher potential returns of the stock market and want to keep investing, even if that means accepting some more risk. You can also consider your time horizon. Investors with longer horizons may be more comfortable taking on more volatility and potentially greater returns, since they will have time to recover from any short-term losses.

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Next, review past performance. Remember, history doesn’t necessarily predict future outcomes, but seeing that stocks have historically risen, even after difficult events like the COVID pandemic, may give you peace of mind to continue investing.

Then, determine what type of investments you want to include in your portfolio. Large, established companies such as Coca-Cola Inc (KO) or Johnson & Johnson are often safer options with more stability, while small companies, called small-caps, are more volatile but can offer higher growth potential. You can also opt for stock mutual funds, which provide an easy and low-cost way to diversify. Lastly, decide how much you want to invest, which could be as little as a few dollars. You can then open a brokerage account and begin purchasing stocks or stock-based funds.