What stocks should you choose when building your portfolio? This is a hard question for the novice investor, but if you rely on relatively safe blue chip stocks you should minimize risk. When selecting individual stocks, I believe you should choose companies that are the backbone to our economy. If one of the companies I have stock in filed for bankruptcy tomorrow, it is due to the zombie apocalypse.I try to select quality companies that are true leaders in their industry. Below are 5 stocks you can start with to build a solid portfolio:
- British American Tobacco
- General Electric Company
- Bristol – Myers Squibb
Each of these corporations play a vital part in their sector and provides you with enough diversification that if one area of the economy is performing poorly, it won’t necessarily crush your investment portfolio. By choosing high quality companies that are managed right, you should not have to worry a lot.
Also, each of the companies mentioned above pay a solid dividend. Nike is more of a growth stock, and therefore, only yields a little over 1 percent. Even though the dividend is smaller, it is a true leader in its industry. Who knows, it might do well in an apocalypse since everyone will need a good pair of running shoes. If you are interested in these stocks you can purchase them through Computershare or Wells Fargo – Shareowner Services.
Now if you do not feel comfortable picking individual stocks, you can always select a low cost index fund from Vanguard. A lot of experts argue that you should put your first $10,000 in to a well diversified index fund such as the Vanguard Total Stock Market Index Fund. I personally have a Vanguard Target Retirement 2040 Fund. This is a well diversified portfolio within a single fund that adjusts its asset mix over time. I use this one for my Roth IRA. Vanguard has various targeted funds that fits your retirement date.
Creating your investment portfolio is never easy, but you do have various options. The first and most important step is paying yourself first and make saving a priority. I do not mind having the problem of finding places to put my money. Not a bad problem to have. I hope this article has been helpful. If you have any questions please let me know. Feedback is always encouraged.