Investing In Stocks
Investing in stocks is probably the most exciting (and risky) part of investment planning. A stock is a part ownership of a company which is publicly listed on the stock market (you can own stocks in a private company which means that it is not listed on the stock market - but this site is focused on publicly listed stocks).
The safest strategy when investing in stocks is to diversify and stick to "blue chip" stocks with the aim of steady capital and income growth over the long-term. This is often the best strategy when it comes to financial planning for retirement because retirement plans tend to be risk adverse.
However, if you are focused on getting major returns through capital growth, penny stocks (low cost stocks that are in smaller more volatile companies) can earn large returns in a quick time frame. Obviously, the downside to this is that penny stocks are very risky and should be avoided unless you (or your financial planner) know what you are doing.
Successful stock investing can yield a 10% return per year or more. However, like when investing in mutual funds, a return of 5%-7% is more realistic.
The benefits of investing in stocks instead of investing in real estate is the fact that you do not have to pay taxes when you buy stock (such as stamp duty), there is no need for insurance, no mortgages, taxes on rental income are higher than on stocks, no need to manage tenants and no need to worry about having to repair and mantain your property.
When trading stocks, you can initiate the trades through your financial planner or through a traditional stock broker. However, you may not be aware that you can trade stocks yourself online, using an online stock broker. Some of the best online stock brokers to use for online stock trading are Ameritrade, ShareBuilder & Fistrade.
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