MINNEAPOLIS — Understanding the stock market is tough. All the moving parts, different marketplaces, the highs and the lows... it's a lot.
The stock market has been in the news lately for record gains in the market. In the week of Feb. 9, the S&P 500 rose 0.6% and finished a day above the 5,000 level for the first time. The Nasdaq composite also jumped 1.2% to pull within 0.4% for an all-time high, which was set in 2021. The Dow Jones Industrial Average was a laggard a day after setting its own latest record. It slipped 54 points, or 0.1%.
Optimism on Wall Street is high as well and it could be a great time to dive into the market. Luckily, by keeping just a few tips in mind, you too can get into investing.
Here are the basics when it comes to picking the right stock for your portfolio:
1. Find a publicly traded company
There are thousands of companies to choose from. You can find a list and more information on the U.S. Securities and Exchange Commission (SEC) website.
2. Figure out how this company makes money
What does the company make or sell? By buying stock you're becoming a part-owner, so you want to ensure that you know what kind of products and services your money supports.
3. Take a look at its annual report
Every publically traded company with its shares listed on a stock exchange is required to file regular financial statements and disclosures with regulators like the SEC. This report will have more information about financials, balance sheets, cash flows and income statements. The company will have this information available online; look for the "Investor Relations" section of the site.
4. Research the company outlook, plans for the future
You can find good information about a company in its annual report, but to go one step further check out trade magazines and online resources. Try to find information about the company's strengths and weaknesses, the quality of its management and its projections for growth.
5. Decide if you want to be an owner of this company
Once you've found a stock that resonates with you, it's time to head to open a brokerage account and buy your stock. There are several options for different styles of traders. Some online brokers also offer educational resources. This resource from NerdWallet recommends these 11 brokers, including Fidelity, Webull and J.P Morgan.
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