The top investment apps showcased can cater for all your investing needs and are particularly easy to use and very helpful for beginners, wishing to start their investing endeavours for the first time, and even for those who would like to pick a stock just for the fun and thrill of it.
Want to jump straight to the answer? Top Brokers & Stock Trading Platforms In January 2022:
Against the backdrop of the pandemic and its subsequent impact on the financial situation of all countries and most people around the world, there is currently a global effort both on the collective and the individual level to bring our financials back on track. For many people this may come through the usage of investment and financial apps, which are very handy and useful as tools since they can effectively handle routine financial tasks on our behalf, tracking our spending and allocating our funds into our different investing endeavours, thus saving us both time and effort.
Read on to find out all about some exciting opportunities and capabilities that such apps put at your disposal through the efficient and effective organization and investment of your finances. The examples highlighted below do not include solutions offered by the traditional players, such as brokers, but rather from innovative fintech providers who have upped their game and propose apps that disrupt the current conditions and lead to bigger and better results for interested individuals and investors.
As previously said investing is not a sport for the light-hearted, especially nowadays against the backdrop of a world crisis caused by the ongoing COVID pandemic and the ensuing and entrenched volatility and uncertainty this has brought to economies and markets across the globe. True to our aspiration to be offering existing and aspiring investors with accurate, credible and insightful information to assist in their investment decisions and trading endeavours, today we explore the topic of stock trading and specifically the top-notch brokerages which offer such a service. If you are already into trading stocks or wish to begin or expand your investment journey from this type of trading, read on to find out what our team of resident experts thinks.
If you wish to trade stocks then you will need an online broker to provide you access to the stock market. However, with literally tons of such brokerages competing for your custom, choosing the right one might be confusing and painstaking. To help you in this quest and to maximise the chances of you picking the right and most appropriate brokerage for your stock trading needs, we evaluated a significant number of such service providers and present you with our own top suggestions of top brokers worth considering. All recommended brokerages offer reasonable investment minimums, grant you access to high-quality trading tools, put at your disposal excellent customer service and do not require the payment of any hidden account fees.
Prior to presenting you with our top selection, please be advised that besides the general characteristics mentioned above, there are different offerings by different brokerages which best suit the needs of different types of investors. For example, active day traders are best served by brokers offering robust mobile trading platforms, for trading on the go throughout the day, as well as brokers with very low or even no commissions. On the other hand, for absolute novices in stock trading, the most suitable broker would be one offering excellent and easily accessible customer support, as well as extensive educational resources, such as webinars and video tutorials, or even one-on-one training.
With this in mind, let us see the list of top brokers, in our view, for different types of investors:
Here are the current best investment apps that you should try out:
Being one of the largest online brokerages, TD Ameritrade is a service provider which aims primarily at facilitating new investors to start trading by making the entire process easy for them. One way in which TD Ameritrade tries to broaden its client base is through a very active social media presence, which gives it exposure and visibility to younger audiences, whom it aims to familiarise with the concept of trading, as well as with the company itself.
When reviewing TD Ameritrade, our team rewarded this brokerage full marks for its education offering, since it offers an impressive array of learning resources for all traders from all levels of skill and expertise. Another way in which this brokerage differs from others is the fact that it allows users to open an account and test its platform without depositing any funds. In fact, it allows you to access all the learning opportunities available and choose when you feel confident and comfortable enough to make your first deposit. In a nutshell, TD Ameritrade is committed in empowering new investors to gain the necessary confidence and skills to become successful traders, thus taking their financial future in their own hands.
Ease of trading and the overall user experience is where E*TRADE excels as a brokerage. A wide range of different investing styles and interests are best served by E*TRADE, through its five different trading platforms, three of which are computer-based and the other two mobile platforms.
The standard version of the online and web app E*TRADE trading platforms have both been redesigned to offer added ease to novice investors who are just getting started. Both the web as well as the mobile standard trading platforms feature user friendly, two-level, user menus, through which they offer access to trading and analysis tools, as well as educational resources. Moreover, traders get the chance to practice before risking, through a demo account that is modelled exactly after the Power E*TRADE platform. The more advanced versions of the E*TRADE trading platforms are elegantly and attractively designed and are packed with more advanced features geared towards more seasoned traders and serving the trading needs for more complex asset classes and strategies.
Webull ranks first in our assessment for top notch brokers for mobile traders, though it offers both a mobile-based and desktop app. Webull’s trading platforms stand out for being highly intuitive and thus fully covering the needs intermediate as well as advanced traders, while providing access to a full range of fundamental and technical analysis tools, including useful charting and technical indicators.
Webull offers commission free trading on a wide range of tradable assets, including more than 5000 different stocks, as well as exchange traded funds (ETFs) and stock options. Moreover, through the Webull demo account you can practice your trading and increase your skills using paper money and without risking any real funds, while through Webull it is also possible to trade short stock through a margin account, provided you commit an initial minimum deposit of $2,000.
Robinhood is our favourite brokerage for beginner traders, a pioneer in the field and amongst the first brokers to be offering commission free trading in stocks, ETFs and options. The Robinhood platform also enables the residents of certain US states to also trade a selected range of cryptocurrencies.
Robinhood’s mobile trading app is the brokerage’s flagship and it offers users easy access to a number of price charts and other trading tools. The broker’s web-based trading platform is very simple and easy to use, rendering it a very good choice for novices. On the other hand, more seasoned traders may perhaps need to resort to other brokers to gain access to more advanced technical analysis indicators and tools. Beginner traders, who often have limited funds available, can start trading immediately through the Robinhood standard account which has no minimum deposit requirement and which also supports fractional share trading.
Retail stock trading is nowadays more popular than ever and with entry barriers being removed since online retail trading makes transactions in stocks readily available and easily attainable for all, there is a huge demand for stock trading apps that facilitate retail traders in their stock trading endeavours. In order to ensure that their specific needs and demands are met, retail traders are constantly on the look out for optimized trading apps that will help them successfully navigate the complex world of stock trading.
It is true that in 2022 the retail stock market has shown signs of unprecedented activity and popularity, with many new stocks entering the scene, including some stocks from very popular companies, such as Gamestop (NYSE:GME) and AMC Entertainment Holdings (NYSE:AMC), whose names act as magnets and further boost the interest and willing to trade for the masses. The stock markets are no longer viewed as the prerogative of the select few, but ordinary individuals can now trade on stocks far more easily than ever before. Indicative of this current boom is the fact that, according to a recent poll, an impressive 28% of all Americans actually traded the GME stock during the previous two months.
The stock market is not novel by any measure, however the record number of new investors it is currently attracting, are testament to the fact that it is currently in a booming, flourishing period. The invigorated and largely unprecedented interest in single share company stocks and CFDs has also meant that currently record numbers of interested investors are setting up brokerage accounts or seeking stock trading apps that best meet their investment needs.
However, the recent boom in demand also came with an evident downside in that it has pushed the traditional brokerage system and already established stock trading apps to their limits, exposing their vulnerabilities and shortcomings and leaving investors unsatisfied and puzzled.
A prime example of this conundrum is the case of popular trading app Robinhood, which faced many problems in early 2022, leading to the repeated throttling of the trading of certain companies, a decision taken in order to keep operations afloat, but causing great upset to retail traders who were depending on brokers like Robinhood, TDAmeritrade and other similar ones in order to cover their stock trading needs.
The ensuing trading halts or clearing requirements investors were faced with, sparked great frustration and put such traditional provides in the limelight for all the wrong reasons, while the untimely trading halts which meant that clients were prevented from buying popular stocks such as GME and others, were deemed as scandalous and sinister, since all retail investors were not getting an even and level playing field.
As investors paid great importance to be able to trade all company stocks and be able to capitalize on all market trends, this drove them away from traditional providers, like RobinHood, whose imposed halts meant investors were missing out on investment opportunities and urged to look for other alternatives to satisfy their trading needs.
Finding the right, best suited and most appropriate brokerage or investing app is however not an easy task and this is further complicated by the fact that modern day investors want access not only to stocks and the greatest possible variety of them, but also to an array of other asset classes, such as forex, commodities, and the new hot trend, cryptocurrencies.
Making the right choice is further complicated by the presence of literally multiple thousand different brokers and trading apps in the online retail market, each charging different trading commissions and implementing different fee structures, making it even more difficult for interested investors to make comparisons, draw conclusions and make the best selection.
What one should always keep in mind however is that what constitutes the absolute best brokerage or best trading app, depends entirely on the specific needs and aims of each individual prospective user and that there are no simple answers or one-size fits all ideal solutions.
Most traders might think that if a brokerage or app makes multiple asset classes and a wide selection of instruments in each class available for trading by them, then this is enough to choose them for their trading needs. This however is by no means enough and all investors, especially novices need to pay great attention to the small print and any specific conditions attached to the offering and how transactions are conducted.
Aspiring investors need to know and understand as much as possible about how things work and operate and be fully aware and cognizant of all the features and attributes for each brokerage or trading app they are considering. Particular attention should be paid to leverage restrictions, issues stemming from regulatory oversight and watchdog requirements, and even simple matters such as the trading hours supported.
As the heightened rush and hysteria for stock trading and all things trading in general is unlikely to subside any time soon, relying on reliable broker or trading app reviews, which give ample information and convenient insights on what investors should expect, becomes crucial. Acquiring in-dept knowledge about the strengths and weaknesses of each brokerage or trading app, enables investors to identify which provider best matches their own specific needs, skill base, requirements and aims.
To help you narrow down your options when trying to select the best and most suitable trading brokerage or trading app to best match your own needs, here’s the top issues you need to pay particular attention to:
If you are a complete novice then perhaps you should first understand that when you are buying a company’s stock this effectively means that you become the owner of a small percentage of the said company and that, since your purpose is to make money, you should choose companies whose stock value you expect to increase. Stock buying may occur through a face-to-face deal with a physical person, who should be a broker, or through the more convenient method of opening an account with an online retail brokerage, which will enable you to start trading. A way to skip brokerage fees would be to buy stocks directly from the company, but not all companies offer this option and thus not all stocks may be acquired in this manner.
If you have decided that stock trading is your cup of tea, then you should follow the following five easy steps in order to achieve this:
Having identified the necessary steps to follow, let us now explore each of them in greater detail:
As already discussed, there are many brokerages to choose from and though the offering of many is very similar, there are often distinct differences in user-friendliness and additional features, that might be better suited to your own particular needs. It is important to remember when comparing brokers that you should not just compare their fees. In fact, it may be wiser to choose a broker with slightly higher commissions, in case it offers exceptional customer service and assistance, as well as educational and trading learning opportunities and resources. This is especially relevant and true if you are beginner trader and investor. Other factors to notice during your evaluation include:
Once your account is set up it is time to choose which stocks you wish to invest in. To do so, and to maximise your chances for profit and success you need to conduct careful research into the companies that interest you to determine if their future is promising and they are worth your money. Such research may be performed by closely following financial news and announcements online, on tv, on the radio, magazines and newspapers. Try to locate dedicated reports by expert analysts who provide reliable information on the earnings, cashflow, revenue and profit margin of each company you intend to invest in. Most brokerages also feature such analysis to their customers from information they obtain from media, analysts or specific industry groups and forums. Finally, since traded companies are public companies their annual reports and other financial details are often available on their websites publicly, since they have an obligation to keep their shareholders informed as well as share such details with government watchdogs, such as their local Securities and Exchange Commission.
Having decided on the company or companies you fancy, your next decision would be how many shares to actually buy. Especially if you are just starting your stock trading endeavours it is important to tread with caution and keep in mind that you should keep your risk exposure as low as possible. To achieve this, you can choose to make smaller investments and spread them out over longer time periods. Until you understand how a specific company fares out and how different investing strategies unfold and are implemented, you may even start by buying only a couple of shares and then gradually continue to purchase small amounts, until you feel completely comfortable with the process and confident about your choice.
The next decision you are called to take is deciding the prices at which you would like to purchase a specific stock. Your trading orders may be of the “market” or “limit” type. A market order entails buying or selling the stock in question at the best price available. When placing a market order this occurs and is fulfilled as soon as you press the submit button on the device you are trading on. On the other hand, if you choose a limit order, this means that you will only buy the stock at a specific price that you set. If you set an amount that is too low and there are no buyers at that price level, then your order will not be completed.
Though the buying and selling of stocks is not difficult as a process, its successful outcome is not easy to attain and it usually requires careful preparation, patience and solid education on trading tactics, strategies and skills as well as remaining up to date with market news.
Due to is solid earning potential stocks trading is considered a good method to build wealth in the long run and be a constant supplementary income generator, or even cover one’s retirement. However, actually making money through stocks entails developing a personal trading strategy that is effective, tried and tested. Solid research and discipline in implementing your strategy tend to maximize success, while trading with your heart and emotions may lead to disastrous results.
Low fees as a result of competition between trading service providers mean that nowadays virtually anyone can start trading in stock with very little money required to get started. Moreover, it is also possible and perhaps wiser to start investing very small amounts and only commit larger sums once you are confident and comfortable. How much you decide to invest per se obviously depends on your own financial situation and your needs and goals as a trader. However, keep in mind that in the long run what usually pays off is not a hefty investment in terms of money, but rather commitment and discipline and wise and insightful stock selection.
Useful pointers to consider when choosing your online stock brokerage:
The offering of stock trading services over the internet is offered by literally several thousand different providers. Such brokerages either offer their services through the MetaTrader4 platform, others have developed their own proprietary trading platforms, while others offer trading services via dedicated mobile applications. The massive number of different brokerages then, makes it difficult for interested, aspiring stock investors to pick the right stock broker for them.
True to our commitment to offer valuable advice to investors and traders we devised a plan to help review as many of the online stock brokerages as possible and filter them in order to come with a short of list of top-notch brokers that you should closely examine and consider opening an account with. Once the short lists were ready, we moved on to carefully analyse the offering of each of these top brokerages, to help you identify the truly best amongst them and present them so that you can proceed to select which of them best suits and matches your own specific needs and requirements.
The main aspects of each stock broker’s offering that we looked at and took into account, are as follows:
Let's explore each of these qualities in more detail.
The ability to diversify your stock investment portfolio is of paramount importance when investing in stocks. While most investors, especially novice ones, start of by buying stock in one or two companies, it is important to be able to have as many options available as they continue their stock trading endeavour. For this reason, we carefully examined the different stock options available via each broker, preferring those brokerages that give investors access to a wider and more varied variety of stocks to invest in.
The fees that investors are called to pay for come in different forms, since some brokers apply a subscription fee or a usage fee for using their platforms to trade. Moreover, there are also fees associated with each trading transaction made, as well as fees for depositing or withdrawing funds from one’s trading account, depending on the method used. This variety in fees often leads to lesser profits for investors, as such fees tend to add up to a significant and recurring amount each month. During our evaluation of brokers, we showed preference to those with low fees on transactions, withdrawals and deposits, also ranking higher those brokers that do not charge fees for access to their trading platform.
Traders vary and so do their needs, with some preferring the use of a desktop trading environment from their home or office, while others wanting to perform sell or buy transactions while on the go, using a mobile device. When evaluating stock brokerages thus, we paid attention to brokers that offer versatility in terms of their platform offering, allowing investors to trade at any time and from anywhere they might be.
To be able to achieve profit from their stock investments, traders need to have a solid knowledge about stocks and how to invest in them, especially if they are complete novices. With this in mind, we warranted special attention to those stock brokers which provide their users with ample opportunities for training and education and put at their disposal relevant materials and resources.
Top-notch customer support is a crucial aspect of a brokerage’s offering and a very significant one, especially for novice investors. When a problem or question arises, investors need to be able to reach out to their broker and obtain answers, advice, support and guidance in a manner that is fast, reliable, efficient and effective. The availability, response speed and quality of the customer support was thus well in our focus when evaluating stock brokerages, awarding special attention to those brokers offering a live chat function that provides users with immediate answers in real time.
Another crucial factor we looked at during the evaluation process was that of trustworthiness, showing preference to brokerage firms with enjoy a good track record and reputation, as well as those which are duly licensed and regulated by pertinent authorities and watchdogs, ensuring that your money is safe during your investment endeavours in the stock market.
However, as crucial as the choice of the right and most appropriate stock broker might be, especially if you are a beginner stock trader, there’s also a couple of things that you must consider before proceeding to choose an online stock trading brokerage:
If you are about to make your first dive into the stock market make sure you are equipped with the right skills and knowledge so that you don’t end up drowning. It is important that you learn both about trading in general as well as the stock market in particular, including on how to pick the right stocks to invest in. Luckily there are ample resources to help you gain this knowledge, with many being available online for free and some being as close as a few clicks away on our own website. You may also use and peruse the several tools and resources provided by online brokers to learn about different investment strategies to discern which ones best suit you. And if decide to start buying and selling stocks on your own, always remember to start small and never risk money you cannot afford to lose as investing always carries the inherent risk of incurring losses, especially when you venture out without adequate previous experience.
It is also important before starting your stock investment journey to figure out what type of investor you intend to be, as this will determine what the right trading account would be for you. For example, if your plan is to be trading often then it is important to seek out a broker and platform that offer unlimited trades at a very low cost or even for free. On the other hand, if your intention is to be dedicating a lump sum each month into similar investments, then you should find a brokerage offering a suitable account type that allows you to select your desired level of risk and enables the allocation of assets, rendering your investing efforts “hands-off”.
Learning the secrets of successful and effective stock trading is a process that takes time and cannot be done overnight, not be learnt entirely on a theoretical level. With this in mind, having access to experienced financial advisors may prove extremely helpful for inexperienced novices. It is common in the offering of online stock brokerages to be granting you direct access to such professional financial advisors, while others offer service where your investments and portfolio are managed by expert financial advisors.
It is up to you to decide whether you will want to assign the management of your investments to a third party, or remain in control and access the help and advice of experts and pros by being able to reach out to them with any questions at any time. It is good to be aware that usually brokerages which act as full-service investing platforms and which cater for the use of robo-advisors, are usually those which also enable you to have direct access and speak to expert financial advisors throughout the trading process.
Similarly to being a bad idea when you put all your eggs in one basket, placing all your investment fund into one company or asset is an equally flawed plan. Especially since the majority of stocks are of a cyclical nature, meaning that their prices move in accordance with the overall economic situation and sentiment, periods of gains are inevitably followed or interrupted by periods of losses, often heavy. In fact, even investors in blue-chip stocks are at risk of suffering potentially huge losses from time to time.
Your best move to protect your portfolio then is the effective diversification of your investments by investing in a variety of different companies and even in a variety of different industries. The problem is that a lot of time, effort and research are needed to successfully pick each individual stock to add to your portfolio. A more convenient way to achieve diversification would be to invest in financial products which are inherently diversified by nature, such as mutual funds, index funds and ETFs.
Since to access the stock market for trading purposes you will usually need the services of a broker, either online or offline, there is an inherent risk attached to the endeavour, in case the broker proves not be worthy of your trust and turn out to be some sort of fraudster or crook. Thus, and to ensure your trading efforts and funds are as safe as possible, you must seek a broker that is reliable, reputable and trustworthy. Usually, reputable brokers offer their clients some sort of guarantee of protection against fraud and take all necessary measures to offer the highest degree of online security as well as account protection through the full segregation of client funds. Moreover, brokers which are properly licensed and regulated by the pertinent authorities and watchdogs, such as being a member of the Securities Investor Protection Corporation (SIPC) are definitely much safer and reliable to trade through.
If having read this far and knowing how you can find some of the best online brokerages for stock investments has sparked your interest in learning more about buying stocks, here’s a concise guide on the processes and steps to follow so that you can soon see your first purchased stocks in your investment portfolio.
It is important to carefully consider and have a clear picture of how much you can afford to invest in stocks, before signing up with an online broker and starting your stock trading endeavour. This first step is important as minimum deposit amounts and requirements for making your first investment differ from one broker to the other. While there are brokers that allow you to start trading with as little as $5 or $10, there are others that require much greater deposits for buying stock. To be able to determine you much of your money you will allocate for stock trading purposes, you need to have a clear view of your entire budget.
Moreover, you need to be aware that the larger the amount you set aside for stock investments the greatest the possibility for profit making, but at the same time the greater the risk for potential losses you expose yourself to. Therefore, you need to ensure that the money you use for stock investment is not money that you rely on to cover basic needs, but a fraction of your disposable income that you can actually afford to lose. Also, be prepared to wait several months before you make enough profit to withdraw but also recognize that even if your initial investment amount is small, it may well be a very good starting point.
Once you know exactly how much you will be willing to invest, you are better prepared to proceed with choosing your online stock broker. When making your choice, make sure that the broker you choose is the one that best matches and serves your own specific preferences, needs, requirements and aspirations as a stock investor, while allowing you to make an initial deposit that is within your allocated budget. It is important to identify a few brokers that are within your budget and then carefully compare their overall offering to determine which suits you best.
Once you decide who your broker would be then you must register for an account and complete the necessary verification processes. Once this is done, it is the time to take a close look at the stock options available for trading via your chosen broker. Thorough research will allow to make the smartest and wisest choice of stocks to invest in. An important parameter would be to check out the best-performing stocks and the prevailing trends in stock investing and some brokers indicate this information on their websites. However, your decision on which stocks to invest in should not be based on this alone. Another significant source of information would be the news feeds, often also available through your broker, which contain information and data on the stocks of various companies, revealing which stocks you should avoid and which you should keep a close eye on.
Once you decide which stocks you would like to purchase you will need to fund your trading account to be able to make transactions. To fund your account, check out which funding methods and options are accepted on your chosen broker’s platform and choose the one that suits you best. By following the instructions provided you will be able to deposit the money you have decided to allocate to your investment endeavour and start buying the stocks you choose.
With adequate funds in your account you will be ready to start buying the shares of your preference. Once the purchase is made make sure you closely monitor your investment and keep track of any changes in the prices of your bought stocks. By being up to date with price changes and trends you will be able to quickly react and sell a particular stock you own to minimize or even completely avoid any losses.
Having covered where and how you can trade stocks online, let us now turn to the all-important matter of what it will actually cost you. As already mentioned, online brokerages charge different types of fees and it is best that you are aware of those before you start your stock trading endeavour.
Commission fees are the service charges that your broker will expect you to pay them every time you execute a trade through your account. Depending on your trading style and habits, the amount will be called to pay in such commission fess will vary. For long-term, hold investors commissions are not very concerning, but for active day traders the amount may pile up pretty soon. This is why it is important to check out the commission fees of each brokerage and make your choice of broker having in mind your own specific intended trading volume and frequency. This being said, increased competition amongst brokerages has led many to be offering no commission fees programmes subject to certain conditions.
Spreads are another type of cost associated with trading and they refer to the difference between the selling and buying price of a trading product. This difference results in traders incurring a gain or loss depending on the actual difference in prices. Spreads are another way in which profits from any transaction can be made, and thus brokers offering the tightest spreads are preferable.
As already discussed, when trading there are also other types of fees to take into account, such as for example clearing fees, which are imposed when completing a transaction though a central depository account and trading fees, which are a percentage of the contract value imposed by certain exchanges. Moreover, different brokers follow different charging policies when it comes to the deposit and withdrawal of funds, depending mainly on the method to be used.
Understanding the financial products, you want to trade in lies at the cornerstone of any effective trading endeavour and greatly maximises your chances for success and profit. There are several different financial products that interested investors can take positions on, such as for example FX, stocks, commodities, ETFs, and indices. Once you learn what they are and the differences between them you will be able to choose which financial product is best for you. After taking a position on any such financial product, then you must remain up to date and keep track of financial news, trends and developments to be able to predict how these may influence the price of your investments.
Besides understanding the financial products to invest in, you must also clearly know and understand what makes up your profile as an investor and trader. To be able to better discern what you should invest in and how much money you would need to invest you must also know your risk appetite, specific goals and time horizon. As all investments are inherently risky you need to define and take into account your exact risk tolerance before making any investment decisions. Moreover, you need to be honest about your goals and what it is you are expecting to achieve through your investment endeavour as well as know how much time you are willing to devote towards this end and what time of time horizon you give yourself to achieve your goals. All these are significant aspects, which will greatly shape and guide all your trading decisions.
Another important issue that is not often very clear, especially for novice stock investors, is knowing what the difference is between stocks CFDs and stocks. The basic difference between the two is that when you are trading stocks it means that you are actually buying shares of a company, effectively owning a fraction of that company and you obtain legal ownership of that stock. When you trading stock CFDs (Contract for Difference) however, you do not buy or sell the actual stock but are simply purchasing a contract which allows you to speculate on its price movements. CFDs work in the same way for other asset classes as well besides stocks and thus one can also trade in FX CFDs, commodities CFDs, ETF CFDs, and more. Irrespective of the actual asset class, CFDs are leveraged products, which means that you are only called to deposit a fraction of an asset’s actual value per trade. Essentially this means that you are trading on margin, but the loophole here is that though possible profits will be magnified any possible losses will be so too.
Another crucial choice for investors is deciding which investment strategy to follow and to do so they need to understand what each one entails and which is best suited for them. To help you make that choice, here’s the four main different investment strategies to choose from:
Those following the passive investor route usually have a lower risk tolerance and tend to prefer to tread in a road that is as safe as possible on their way towards financial security through investment. Passive investors are usually more conservative in their decisions and not after get rich quick schemes but rather relying on the passage of time and compounding interest to make money. Thus, achieving the highest possible return from an investment is not a priority for a passive investor and they are happy for as long as the amount of their original investment does not decrease and their returns beat inflation. Therefore, the most suitable stocks for a passive investor to buy would be blue-chip stocks with consistent performance.
Growth investors seek to make profits within the shortest time period possible and thus have a greater appetite and tolerance for risk. Growth investors are even willing to incur losses for the opportunity to obtain a bigger payoff in the future. Growth investors often adopt an “all or nothing” gambling-like approach to their trading decisions and attempt to jump in the markets and buy when prices reach their bottom and sell out as soon as they peak. Admittedly this is a very risky trading strategy and it is not at all suitable for inexperienced, amateur investors as it requires experience to be implemented as well as skill and knowledge to perform fundamental analysis and effectively read charts and indicators.
Value investors are those scanning the market to identify and buy “hidden gems”, i.e. undervalued stocks which they can buy at prices lower than one would expect. They proceed with the selling of such stocks only when their price reaches an expected, projected level, irrespective if this takes a considerable amount of time to be achieved. To be able to identify the companies whose stocks are under-priced, value investors engage in a critical analysis of the markets applying the principles of fundamental analysis. An example of the type of stocks value investors may be closely monitoring are tech companies having the pipeline innovative projects that may help resolve certain real-life problems in the foreseeable future.
Hands-off investors do not actively engage in their own investment efforts, but instead let others manage their investment portfolio, such as professional fund managers. Besides being a very convenient way to invest, the hands-off investment approach suits those who do not have the time to learn about or properly research their investments or lack the necessary skills to perform the analysis required or execute the actual investment process. Hence the main concern of a hands-off investor would be to find a reliable and trustworthy fund manager who will help produce the desirable results, without charging excessive fees which reduce one’s investment returns.