When was the last time a friend or co-worker told you about a hot stock tip? And tried to give you advice for investing?
The truth is, tips are for waiters.
It’s not that you shouldn’t seek out great advice, but much of the time, it’s just hype. Getting the right information about investing is essential to your potential for success. But that doesn’t mean it’s easy.
In fact, it’s tough to filter out the noise between credible advice and hype.
So how can you get the right information?
Investment Advice Starting Point
Start your search with stocks that peek your interests, enjoy and understand. The annual report of a company is the first place to really get to know what the company does and how it works.
So what’s in the annual report that’s so important?
Besides almost everything you’ll need to know; CEO pay, corporate actions, marketing campaigns and initiatives, spending and the important income numbers, it’s all there.
The annual reports can be a bit dry and dull for someone not so interested in the chore of investing. That’s okay; that’s where an advisor can help guide you.
But if you’re interested and still lost in an annual report, don’t despair.
If you can’t understand it, don’t invest in it. Move on to another company until you find one you can understand completely, believe is a good value and can buy it for a reasonable price.
Informed investors read these reports cover to cover and so should you.
If digging through annual reports doesn’t seem like your cup of joe, then get a professional who does spend the time.
Investing Information Beyond the Annual Report
Don’t be fooled by industry pros not in the investment world. Your tech-savvy brother-in-law may know a thing or two about online retailers, but stock price valuations are a whole other story.
Instead, bend their ear to gain insights into how their business and industry work. You might learn something — you should always be open to learning.
Just remember, there is a difference between how a business works, it’s value and price.
*There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.