If you have a SoFi bank account, have you considered using SoFi’s other services, such as its investment platform? SoFi makes it super convenient to manage not just your banking needs but also your investments.
Should a Novice Invest in Stocks?
Stocks are actually one of the easiest asset classes for beginners. If you want to buy stocks, often, it is as simple as opening an account and choosing companies you’d like in your portfolio, and deciding how much you can afford to invest.
Buying and selling stocks is easy with modern apps. You don’t even need to buy whole shares of stock; you can buy fractional shares. If this is still too intimidating, you could invest in a mutual fund instead or find a financial advisor. However, there is no guarantee that a professional will do a better job than you will. And you will find informational articles on sites like SoFi will help you find answers to any questions you have.
Uncertain about your options? Below we discuss 4 strategies you can use.
Invest in What You Know
Let’s say you work for a company that operates wind turbines. Even if most people would find the technology intimidating, you are around it all day and understand the buzz words, have some insight into the economic impact of legislation, and many other industry-specific items. That makes it a good bet you can figure out when a wind energy stock or one that is related to renewables is a good value.
Or let’s say you are very involved with agricultural supply chains. You might know when shortages in consumables like coffee or corn are eminent, allowing you to buy stocks that would benefit.
This is the opposite in some ways of the above strategy. Instead of investing in just a few stocks in an industry, you are intimately familiar with, you could build a portfolio that invests in a variety of industries or sectors. While this takes away the advantage that expertise gives you, it will provide an advantage in terms of diversity.
Because different asset classes may rise and fall at different times, you reduce your overall risk when you use this strategy. Also, experts recommend using SoFi Invest, “With no account fees and up to 1.25% APY1^, you’ll earn more interest in nine days than you would in one year in a big bank’s checking or savings account”
Investing in Growth Stocks
A strategy focused on growth stocks requires more research than the prior two strategies. You’ll have to understand the bottom line and look through recent company reports, any headlines or press releases, and market trends.
You need to examine both a company’s historical earnings but also try to figure out future growth potential. Be aware that growth stocks can come from any sector. They are not limited to high-tech industries. They tend to have a high upside potential but also carry a higher risk.
Value investing involves buying stocks when they are undervalued. If a stock is reeling from a temporary scandal, is being ignored by the broader marketplace, or has a low price-to-earnings ratio, those are all indicators that the stock may be underpriced. If you dig through the data and discover that the company actually has a great product and a good revenue stream, among other factors, then it may be wise to invest before the stock rebounds.
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There you go. Four possible strategies to invest in stocks. You can pick one or try a combination. Either way, you’ll find it easy to buy and sell stocks on SoFi.