It can be tough to pick the best stocks for beginners when you aren’t sure what to look for. You want something that will give you good returns, but you don’t want to take too much risk either.
If you research and make smart choices, investing can be a great way to grow long-term wealth- you’ve already taken a great step by reading our article!
In this post, we’ll give you tips to start investing and recommend stocks and investing platforms so you can start growing your wealth today.
Investing For Beginners: Stuff You Should Know
When you’re first getting started in stocks, you should know a few terms. Here’s a quick rundown of some of the most important ones:
- Index funds: An index fund is a mutual fund that owns the same securities as an index. The most common index used is the S&P 500, including 500 of the largest U.S. companies.
- Brokerage account: You’ll need to open a brokerage account to buy stocks. This type of account allows you to buy and sell securities. Compare the fees that some financial institutions charge before opening one.
- Robo-advisors: A Robo-advisor is an online investment platform that offers automated investing services. They typically have lower fees than traditional brokerages.
- Stock: A stock is a share in the ownership of a company. When you buy a stock, you’re buying a piece of that company.
- Dividend stocks: A dividend stock is a company’s share that pays out regular dividends (money/payments) to its shareholders, giving them passive income.
- Blue-chip stocks: A blue-chip stock is the stock of a large, well-established, and financially sound company that has operated for many years.
- Robinhood or Betterment: hands-on vs. handoff; Robinhood is a commission-free stock DIY trading app that lets you buy and sell individual stocks, ETFs, options, and cryptocurrency. Betterment is a Robo-advisor that offers automated investing and retirement planning in stocks, savings accounts, ETFs, and more.
9 Best Stocks For Beginners
Investing money is an essential aspect of personal finance. It means putting your money into something that might make more money over time.
You’ll have a financial stake in the company or other asset you invest in, but what companies do you start investing in to ensure you get some money back on your investments?
Here is our list of the 9 best starter stocks for beginner investors to use to grow long-term wealth:
- NASDAQ: MSFT
- PRICE AS OF 5/12/22: $255.35
Microsoft is a large and stable company with a long history of steady growth in tech stocks, so it’s a blue-chip stock that’s relatively safe. That means it’s less likely to experience significant swings in price, which can be helpful if you’re trying to avoid losses.
Also, Microsoft is a diversified company that offers products and services in several industries. This can help to protect investors from the effects of industry-specific downturns.
And because Microsoft is such a well-known brand, it’s also easy to track the company’s performance.
- NASDAQ: AMZN
- PRICE AS OF 5/12/2022: $2138.61
For a beginner investor, Amazon stock is one of the best-performing stocks on the stock market. The company has a long growth history, and its stock price has consistently increased over the past few years.
Amazon is a household name, and millions of people worldwide use its products, expanding into more and more areas. They’re now in the self-driving car business, and they’re also web hosting and subscriptions.
So, they’re not just relying on one stream of income to make their business money. And that’s important because it makes them less susceptible to economic downturns.
The stock has tripled in value in the last four years, and it shows no signs of slowing down, so the high cost of the stock may bring you more money quicker than more affordable stocks.
Plus, you can invest as little or as much as you want using fractional shares. This means you can buy part of a stock, less than a full share of Amazon stock, making it more accessible for whatever funds you have.
- NASDAQ: AAPL
- PRICE AS OF 5/12/2022: $142.56
Apple is a solid buy-and-hold choice for the beginner investor and another blue-chip stock with which you can have a lower risk.
Apple also has a strong brand and competitive advantages in many of its markets. The company has been doing well recently, and its stock split in the summer of 2020 made it more affordable for new investors.
The company has a long history of paying dividends, and its share price has generally trended upwards over time. Since they’re constantly rolling out new products, the share price stays high.
As a result, it is likely to continue to perform well. While there will always be some ups and downs with any stock, Apple is a relatively safe bet for newer investors looking for a solid buy-and-hold investment.
4. Walt Disney
- NYSE: DIS
- PRICE AS OF 5/12/2022: $104.31
With a long history of growth and profitability, Disney is a safe bet for beginners looking to build a solid foundation for their portfolio.
For many people, the word “Disney” conjures up Mickey Mouse, Donald Duck, and Cinderella’s castle images. But while the company’s roots are in animation, Disney is so much more today.
Disney is now one of the largest media conglomerates globally, with a vast array of businesses that span theme parks, movies, television, consumer products, and more. And their reach is truly global, with operations in dozens of countries worldwide.
For new investors, Disney is an outstanding buy-and-hold stock. Their size and diversification offer some protection against market volatility, and their strong brand gives them a competitive advantage in many industries.
5. JPMorgan Chase & Co.
- NYSE: JPM
- PRICE AS OF 5/12/2022: $118.04
If you’re looking for a safe and reliable stock to add to your portfolio, JP Morgan Chase is worth considering. JPMorgan Chase has become the world’s fifth-largest bank in terms of assets and counts as a blue-chip stock.
It offers a full range of banking services, including consumer and commercial banking, asset management, investment banking, and more.
Additionally, JP Morgan Chase pays regular dividends, providing investors with some additional income. The company has a long history of profitability and is well-positioned to continue growing in the future.
Overall, JP Morgan Chase is a solid choice for newer investors. It’s a large and established company with a proven track record of success. Plus, its dividend payments can provide some extra income.
- NASDAQ: GOOG
- PRICE AS OF 5/12/2022: $2,263.22
Alphabet is a good stock for the new investor with more money to put into the stock market. It is the parent company of Google, the world’s most popular search engine.
Google Ads, Android, Chrome, Google Cloud, YouTube, Google Maps, and other products and services run through Alphabet. This gives Alphabet a lot of exposure to different tech industry areas and plenty of room to make profits.
Alphabet has strong fundamentals and has consistently posted substantial revenue and earnings growth over the past few years, so it’s a solid choice for new investors.
- NYSE: V
- PRICE AS OF 5/12/2022: $193.97
Visa is an excellent stock for the beginning investor to add to their starter portfolio because it’s a well-positioned household name for continued growth. Visa is the world’s most widely used electronic payments system, facilitating transactions in over 200 countries and 160 currencies.
And with more and more businesses moving to online and mobile platforms, Visa is poised for continued growth.
- NASDAQ: NFLX
- PRICE AS OF 6/3/2022: $198.98
Netflix is a leading streaming television and movies provider with subscribers in 190 countries. The company grew rapidly, but its shares have been experiencing a drop in 2022 with the rise of other streaming platforms.
Despite the recent pullback in share price, Netflix remains a strong company with a large base of loyal subscribers. The company continues to invest in content, which should help them maintain its position as a leading streaming service. Many still consider Netflix one of the best stocks to buy.
As with other stock investments, research to ensure they are the best stocks to buy before investing in Netflix or any other company. Be sure to check their past market performance.
- NYSE: SHOP
- PRICE AS OF 6/3/2022: $353.66
Shopify is a Canadian e-commerce company that provides online retail platforms for businesses of all sizes. Many businesses trust the company’s strong brand. It has been proliferating in recent years as more and more businesses move their operations online.
The company’s platform is easy to use and provides businesses with a wide range of features, making it a popular choice for online retailers and with seasoned investors as a solid stock market investment for their investment portfolio.
The uncertainty surrounding interest rates has caused Shopify’s price to drop to just 9.5 times trailing sales, the lowest level since 2016.
One thing buyers should know! The company announced a stock split in April 2022 that will happen sometime around June 22, 2022. The shares are set to split at 10 for 1 of the Company’s Class A and Class B shares.
Investing For Beginners
Know Your Risk Tolerance
Before investing in stocks, you need to know your investment goals and how much risk you are willing to take buying stocks. This means you need to understand how much money you can afford to lose without causing too much stress.
For some people, investing in stocks is too risky. If the stock market takes a turn for the worse, they could quickly lose money. They would rather take the passive approach to something more stable, like a mutual fund or a CD.
Some people are more than happy to take a risk if it means they could make more money in the long run. They understand that individual stocks can be volatile, but they’re also willing to ride out the ups and downs to make more money.
One way to figure out your risk level is by using a stock market simulator. Stock market simulators are helpful for people who want to learn about the stock market.
Avoid Penny Stocks
Penny stocks are shares of small companies that trade for less than $5 per share. While they may seem like the best stocks to buy for a diversified portfolio, they’re actually highly speculative and are riskier investments.
Penny stocks are often extremely small businesses with no track record of success, unlike Amazon or other blue-chip companies. At best, penny stock investors are playing a guessing game of how things will go well in the future.
Companies issue many cheap stocks with little financial history or transparency, making it difficult to assess their value and whether they are profitable companies.
The best thing to do before investing in these stocks is to talk to a financial advisor. They can provide investment advice about whether the stocks have seen revenue growth and gear you toward better growth stocks.
Check Out Other Investments
Many people think of the stock market when they think of investments, but there are many types of investments.
Here is just a short list of options you should consider:
- Real estate: a great long-term investment, with properties you can invest in or REITs to check out
- Cryptocurrency: there are options like Bitcoin, Ethereum, Dogecoin, and more
- Retirement funds: never forget to start an IRA and set aside money for your future
- Small businesses: this can have higher risks, but investing in small businesses creates new paths for the future- after all, Amazon was once small right?
Don’t Invest In What You Don’t Know
There is a piece of advice that Warren Buffett said that new investors should listen to at first. He said, “Never invest in a business you cannot understand.”
Warren Buffett is one of the most famous and successful investors in history. So if he says something, it’s probably worth taking a listen.
This advice is essential because it’s very easy to get caught up in the hype of hot new stock investments. But if you don’t understand how the company makes money, you’re more likely to lose money.
Stock investing is all about buying shares of a company that will be successful in the future. If you don’t understand the business, it’s impossible to predict whether or not it will be successful.
Do your research before investing in anything to know you are buying the right stocks. Make sure you understand what you’re buying and why you’re buying it when you start stock investing.
Invest With Fractional Shares
Do you want to invest in stocks but don’t have much money to use to start investing?
Fractional shares can be an excellent way to diversify your brokerage account portfolio without investing a lot of money.
With fractional shares, you can buy a portion of a company’s individual stocks instead of the whole thing. This way, you can invest in the stocks you’re interested in without putting down a lot of money at once.
For example, let’s say you have $100 to invest and you want to buy stocks in three different companies. With fractional shares, you could buy $30 worth of stock in each company.
If one company’s stock goes down, you’ll still have money invested in the other two companies. This can help you minimize your losses and still make money in the long run.
Don’t Forget Your Retirement Account!
It’s never too early to start investing in your retirement fund. Even if you’re still in your 20s or 30s, every little bit you can put away now will pay off down the road.
And thanks to the power of compounding, the sooner you start saving, the more money you’ll have when you retire.
There are many different types of retirement funds. It can be hard to choose which one is right for you. But if you do some research, you can find a fund that is right for your needs.
There are two types of Individual Retirement Accounts: the traditional IRA and the Roth IRA. You can save up to $6,000 each year (or $7,000 if you’re 50 or older) with a traditional IRA.
The money in your Traditional IRA will grow without being taxed, which means you won’t have to pay taxes on it until you withdraw it in retirement.
Another option is a Roth IRA. With a Roth IRA, you contribute after-tax dollars, but your withdrawals in retirement are tax-free. This can be a good option if you think your retirement tax rate will be higher than it is now.
Don’t forget about 401(k) plans. If your employer offers one, be sure to take advantage of it. Employers often match a certain percentage of employee contributions, so it’s like getting free money.
Best Investment Platforms
People often ask me what the best investment platforms are. There is no one simple answer to that question, but there are a few things you should look for on an investment platform to open your brokerage account.
- Before investing money, get investment advice from an expert. An investment advisor can help you choose the right ones for your goals and risk tolerance and also help you know when to buy and sell stocks and manage your investment account.
- When looking for an investment platform, look at ones with low-cost trading commissions. Many investment platforms charge fees for things like account management or transaction costs. But many great options don’t charge these types of fees.
- Shop around and compare different investment platforms, like low-cost management fees, before filling out an account application. Some even offer free stocks if you sign up with them!
- Make sure the platform you choose is easy to use and has educational tools. You don’t want to waste time learning how to use the platform. Pick one that is easy for you to understand and start using it.
Here are my top three investment platforms to use to open a brokerage account:
Robinhood is a DIY trading platform where users do their research and then trade stocks, options, and cryptocurrency
They were the first platform to offer brokerage services with no commissions or managing fees and is known for their cryptocurrency investing.
Robinhood is great for beginner investors and offers 2 free stocks when you sign up, but we also found that if you want to invest in your retirement or mutual funds, you’ll want a different platform.
Our Robinhood review covers more of what you need to know if you want to invest with Robinhood.
Betterment is one of the leading online brokers that aims to provide a simple, easy-to-use platform that anyone can use with their investing goals to grow their wealth.
It offers a variety of options, including stocks, exchange-traded funds (ETFs), buy mutual funds, and bonds.
It also offers a variety of account types, including Roth and Traditional IRAs and 401(k)s.
The Robo-advisor service makes it easy to set up an account and start investing. With this service, you can set up automatic deposits and investments and decide how much risk you want to take on.
Betterment makes it easy to grow wealth without worrying about making the wrong decisions. Find out how else Betterment can optimize your investments by reading our Betterment review.
M1 Finance is a Robo-advisor platform that allows you to invest in various assets, including stocks, ETFs, and mutual funds. You can also set up automatic investing plans, so your money is automatically invested regularly.
With M1 Finance, you can grow your portfolio without paying high fees or trade commissions. Plus, the platform is easy to use and provides various helpful features, like portfolio rebalancing and tax-loss harvesting.
The M1 Finance mobile app makes it easy to track your investments and make changes to your portfolio on the go.
Learn more in our M1 Finance review and see if you can benefit from their easy, pre-made portfolios and other features.
Acorns is an app that helps beginning investors get started investing. It makes it easy to get started investing with just a few clicks.
You can start with as little as $5, and the app will invest in a portfolio of ETFs and mutual funds for you.
Acorns rounds up your purchases to the nearest dollar and invests the spare change into a portfolio of ETFs. For example, if you buy coffee for $5.75, Acorns will invest $0.25 in a portfolio of ETFs.
Once you’ve built up your portfolio, Acorns will automatically rebalance your portfolio for you. This makes it a great way to start investing without worrying about managing your investments.
And if you’re not sure where to start, check out our Acorns review to see how the Acorns app can provide you with some guidance on investing your money.
The stock market can be a great way to grow your wealth. But it can also be risky for beginner investors to buy stock. With so many choices for online brokers, it can be hard to know where to start and what the best investments are.
For beginner investors, it’s often best to start with stocks that offer stability and growth potential. These are typically large companies with a long history of success.
Beginner investors can buy stocks in companies doing well but must know that these companies may be riskier even while they offer the potential for more significant profits.
When choosing stocks, consider your financial goals and risk tolerance. With careful planning and research, you can find the best stocks for your portfolio, enjoy the rewards of investing in the stock market, and maybe even retire early.