Investing in stocks? Our mission at Happy Investors is to help you move toward successful stock investing. We believe in achieving financial freedom and financial independence. Investing in stocks is the way to achieve this. Useful, and also a lot of fun. However, investing in stocks does come with risks. As a beginner, it is very important to learn first. Gain knowledge and experience before investing big. On this page you will find free articles and blogs about investing in stocks: from dividends to small cap stocks.
Investing in stocks is risky. There are different types, with small cap stocks being the riskiest. Large, stable dividend stocks tend to be less risky. It is important that you learn to invest in different types of stocks. The right mix of growth and dividend is important to spread risk. At Happy Investors we therefore apply strict criteria. The essence as a beginner is to only invest in shares that you understand. This goes beyond knowing what the company does. Do you know how it makes money? What the competition is doing? What its market potential is?
In addition to the company, the financial valuation is also important. You only want to buy strong companies at a cheap or favorable stock price. Even the best companies can be a bad investment if you pay the top price.
Higher risk also means potentially higher returns. Investing in small cap stocks are a good example of this. Such companies are very small and sometimes even loss-making. Any profits (cash flow) they make are reinvested for business growth. These types of companies want to grow quickly to become the biggest market player. If successful, the stock price will rise exponentially. If not, the price will fall sharply. They may also go bankrupt sooner. Therefore, small cap shares offer more risk against potentially (much) higher returns.
How to invest in shares depends entirely on your personal financial situation, risk profile and knowledge. The more knowledge you have, the more successful you will be. Growth stocks and Value Investing are examples of this. With Value Investing you learn to invest in stocks that are undervalued relative to their intrinsic value. This way you buy profitable companies at a favorable or even cheap stock price. This lowers the risk, while still achieving upward returns.
Do you choose the risky growth stocks, the sustainable dividend stocks or do you delve into Value Investing for "bargains" on the stock market? On our blog you will find free articles to learn how to invest in stocks. Especially suitable for long-term investing.
Where to start buying stocks? Buying stocks is best done through a low-cost investment platform. There are now investment platforms that charge minimal fees. Think of commission-free investing in shares and low currency costs. In this way, we can buy shares cheaply. In the long run, especially with large amounts and frequent trading, this leads to large cost savings. Often up to hundreds of dollars. In this way, we can influence our net return, simply by buying stocks at low cost.
Analyzing shares is very crucial when investing in stocks. As a beginner, you really need to know how to analyze stocks. Otherwise you run the risk of buying bad companies, or good companies at too high a price. In both cases you can make a loss. A lot of losses. Sometimes stocks fall by -90% and never recover. In this case, you lost a lot of money. Your money.
Avoid losing money and learn how to analyze stocks. Read our articles for more insights or check out our stock analysis.
Dividend stocks are probably the most accessible for beginners. Starting with stock investing is not as easy as some make it seem. Particularly with high risk, large losses can occur. Dividend stocks are fortunately among the lower-risk stocks within this category. Another advantage is that we receive periodic dividends from these stocks. This can only be issued if companies are in a healthy financial situation. After all, paying dividends implies that the company is making a profit. And that it can pay out this money as dividends instead of reinvesting in business growth.
Investing in dividend stocks is lower risk and offers a little more security of income. On the other hand, the potential return is usually lower.
Investing in small cap stocks is the riskiest activity as a beginner. Small cap stocks are characterized by companies with a maximum market value of $300 million to $2 billion. Shares under $300 million are called micro caps. The advantage of small cap stocks is that they can offer very high returns. If a company of $100 billion market capitalization gives x10 returns, it must grow to $1000 billion. That is a very high market capitalization that is only achievable with very high profits. With small cap stocks, this growth is more realistic. A $1 billion company can grow faster to $10 billion. This implies x10 returns, which is extremely high.
The downside to small cap stocks is that they contain high risk. Think of growing pains, competition, bankruptcy, poor earnings model, et cetera.
Do you want the best investing in stocks? Then learn how to invest in value stocks. Value stocks are characterized by a very cheap stock price in relation to the intrinsic value of a company. In some situations it is possible to buy shares of a company that is actually worth more. The stock market is not at all rational (although one would like to think so). In the prevailing emotions, sometimes great opportunities present themselves. For example, we can buy even strong companies at a very low stock price. This gives (1) lower risk and (2) higher returns. Therefore, value stocks are the best way for structural and sustainable returns.
Finally, there are ETFs. If investing in stocks seems too difficult or time-consuming, ETFs are the solution. Why make things difficult when you can buy the entire stock pile? Buy all the stocks at once. That way you have much lower risk. On the other hand, the return is also lower but more certain.
Read all about ETF investing here.
Anyone can invest successfully in stocks. The main task is to keep your emotions in check. Avoid hypes. Avoid stocks you do not understand. Investing in stocks is primarily about avoiding risk. You do this through sublime stock analysis. You want to buy only the best companies at a favorable stock price.
These are 7 steps for successful stock investing:
Investing in shares is never passive. Passive investing is only possible with managed investments, real estate funds and certain ETFs. Equities, on the other hand, remain in constant motion. Sometimes a company is hit by unexpected events. Think of government intervention, or a major scandal. In this case, you want to sell shares as soon as possible, because future profitability is at risk. On the other hand, there may be unique stocks that no one has on their radar yet. These are the gems that can generate exponential returns.
We use the Insider membership. This is equity research from a team of hedge fund managers who manage $100 mln of assets. They share her personal investments through the Insider membership (hence the name). We believe very strongly in this stock research. We invest in it ourselves. With success so far. That is why we have become an official partner. Click on the banner for more information:
Successfully learn to invest in stocks? Doing well! Investing in stocks has great risks to money loss. As a beginner, it is necessary to avoid major beginner's mistakes to stocks. By learning from other investors, you can make a much better start than doing everything on your own. The solution is to take a stock investing course. There are several stock investing courses. One focuses on day trading (very risky). Another focuses on ETF or dividend stocks (better choice). And there are courses for investing in value stocks.
Want to know more? Check out our review on capitalist exploits for more on the expert in value stocks.
Stocks are not your only option for investing money. In addition to stocks, you can also invest in real estate, commodities, crypto currencies, P2P Lending, art, wine and other options. Why invest in stocks? Because you can achieve structurally higher returns with stocks, purely based on knowledge and experience. It is possible to invest in unique companies. Companies that are becoming larger and more profitable. They deliver proportionally much higher returns. Higher returns than real estate, commodities, loans, et cetera.
The only exception is cryptocurrencies. With crypto, higher returns can be achieved compared to investing in stocks. But beware: crypto is extremely risky. Analyzing stocks is possible. We can determine how much a company is worth and whether it will be worth more in the future. With cryptocurrencies, this option is not there. It's speculating on supply and demand. It is gambling.
Know the saying: never bet on one horse.
With stocks, this is the same thing. We opt for an investment portfolio that includes both shares and real estate. Those who dare to take a little more risk could invest up to 3% in crypto. And you can supplement with alternative investments. Personally, we opt for 75% in equities. However, this depends entirely on personal situation. For you it may be better to take even less risk. In this case, you can opt for more bonds and less equities. And more real estate and less crypto.
Why invest in shares? Because it can make you financially free in the long run. Start today by reading our blogs and analysis.
Want to know more about real estate? Read all about investing in real estate here.