‘Investing lessons from my grandfather: Choosing the right stock’ (2)

Welcome back to the investing lessons from my grandfather. We started this series last week, if this is your first time here, feel free to catch up from last week’s edition.

Now that you’ve got a grasp of the stock market basics, it’s time to delve into the exciting journey of selecting the stocks that resonate with you.

My grandfather Pa Oloko, was not one that chose stocks for immediate gratification, his style was to build ownership and get regular dividends.

So he was not in a rush to double his investment, he was focused on building something for himself and for his children through stock investment.

Today we shall be looking at how to choose the right stocks.

1. Start with Your Goals:

Before you dive into the stock market, ask yourself, “What do I want to achieve?” Company ownership?, Additional source of income through regular dividends?  Once you can ascertain your goals, this will guide your investment choices. Always choose stocks that fits your financial objectives.

2. Understand Your Risk Tolerance:

How much risk are you comfortable with? Some stocks are like spicy jalapeños, offering the potential for high returns and can also come with a bumpy ride. While others offer only capital appreciation for the long term.

You have to figure out how much risk you can stomach. Can you stomach a 50% loss or more? Your risk tolerance determines your “stock spice level.”

3. Do Your Homework:

Research is your secret sauce. Study the companies you’re interested in, their financial health, and their growth potential. Look for news, read reports, and check out their competitors. Researching stocks helps you make informed choices.

4. Diversify Your Stocks

Remember the popular adage; ‘ Don’t put all your eggs in one basket.’

Diversification means spreading your investments across different sectors and industries. Have a mix of stocks in your portfolio; oil and gas, hospitality, banking, telecoms, etc.

5. Always Invest in What You Believe In

Consider investing in companies that align with your values. If you’re passionate about sustainability, look for businesses that prioritize environmental responsibility. After all, everything is not all about money.

Investing in what you believe in can be deeply satisfying.

6. Keep an Eye on Trends

The stock market is a constantly changing market. (last week, I spoke about the bear and bill market, read up) Stay up to date with market trends and emerging industries.

7. Be Patient and Avoid FOMO (Fear of Missing Out)

Investing isn’t about quick wins; it’s a marathon, not a sprint. Don’t rush to buy a stock just because everyone’s talking about it.

Sometimes the best investments require patience.

8. Use Tools and Apps:

There are lots of apps and online tools that can help you analyze stocks, track your portfolio, and make informed decisions. Think and use them as your tool to achieve a perfect portfolio for you.

Your stock portfolio should be a reflection of your tastes, preferences, and aspirations. So start your wealth creation journey and start picking the stocks that’ll help you achieve your financial goals and create a prosperous future for yourself and loved ones.

Remember, choosing the right stocks can be incredibly satisfying!

Feel free to share with me on your choice of stocks.

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