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3 Quick Points to Simplify Your Stock Market Investment Research
Make things easy for yourself
Investing for the long-term does not have to be difficult, especially when there are exchange-traded funds (ETFs) that showcase and allow you to gain exposure to the strongest and most valuable companies in the world. If you want a simple approach to conducting your stock market research so that you can invest in companies that best fit your investment criteria and will likely be around for the long term, you can do the following:
1. Select an ETF and Lookup Its Top Holdings
2. Select Four Companies from Its Top Holdings to Research
3. Select Two Companies to Invest In
Note: I am not a financial advisor. I do not know your financial situation. The following information is for educational purposes only.
1. Select an ETF and Lookup Its Top Holdings
When selecting an ETF, you cannot go wrong with the Vanguard S&P 500 ETF (VOO). VOO is an ETF that seeks to track the performance of the S&P 500 Index, which is considered the benchmark of the U.S. stock market. On Yahoo Finance, you can see the top holdings of VOO are Apple, Microsoft, Amazon, Facebook, Alphabet, Berkshire Hathaway, Tesla, NVIDIA, and JPMorgan.
2. Select Four Companies from Its Top Holdings to Research
Now that you know the top holdings of VOO, select four companies to research. For example, since you have an iPhone, use a Windows PC, shop on Amazon, and constantly use Facebook to stay in touch with family, you select Apple, Microsoft, Amazon, and Facebook as the four companies to research. When it comes to research, aim to learn about the fundamentals of the company, such as its business strategy, profit drivers, market risks, leadership, and economic moat. You should also aim at conducting technical analysis to identify price trends.
3. Select Two Companies to Invest In
After conducting your research, select the two companies to invest in long-term. For example, you decide to invest in Apple and Microsoft due to their strong business strategies and significantly wide economic moats. Their up-trending prices over the long term historically were also a factor.
If you want a simpler approach, invest in VOO. If you want to increase your chances of greater returns in the long run, selecting two companies from the top holdings of a strong ETF like VOO will assist in setting you on that path. When it comes to the interval you will invest at, you must decide for yourself if you want to dollar cost average every set amount of time or if you want to invest lump-sum after a specific price correction has occurred. As stated earlier, investing for the long term does not have to be difficult. Let me know what you think about this strategy!
