One of the great things about building your own stock portfolio is that it can grow to be one of your biggest assets, since all of the shares of stock that you own constitute equity that contributes to the value of your net worth. You also reserve the right to liquidate part of your stock portfolio at a later date in order to turn some of your equity into cash if you need to make a large purchase. This article will describe a simple strategy for picking which companies you should invest in to build your stock portfolio.
A good rule for picking a big, reliable “blue chip” company is to find out which companies have been around for over 100 years, since this can indicate that they will likely be around in another 100 years. You can also pick some of the large name brand companies that you are familiar with, such as the places where you shop, the companies that make the electronics that you buy, the car that you drive, or the computer software that you use. These can all constitute major publicly traded corporations that many of us have heard of, and buying stock in these companies can be the backbone of your stock portfolio.
Using this simple strategy to pick some of the biggest and well-established companies in the world, make a list of 25 of these types of big blue chip corporations. The next step is to sign up a new account at one of the major online stock brokers, and fund your account with enough money to buy just one share of each of these 25 companies. Taking this step means that you are serious about building your stock portfolio into a large asset, and you have just designated yourself into the top percentile of individual investors. This stock portfolio should now be viewed as a piggy bank or one-way road, where you slowly increase the number of shares that you own in these 25 big companies without taking any money out. Since this is a long-term investment strategy, you do not need to concern yourself with the daily movements in the stock price.
A good alternative to using an established stock broker is to use a direct stock purchase program, which may not be available for all companies. Some of the really big corporations that we have all heard of such as Coca-Cola will offer a direct stock purchase program where you can obtain a certain designated amount of company stock without the need for a traditional online stock broker. If you have picked a certain company that you want to invest a lot of money into, this may be the best option for you.
Remember that when you buy shares of stock in a corporation, you are literally buying a stake in that company and you now have a vested interest in that company’s progress. This is an investing strategy that is designed to build long-term wealth, and not a trading strategy where you try to make money from the temporary gyrations of a stock’s value. If you treat your stock portfolio as a long-term investment, this can soon grow to become your biggest personal asset that contributes to your net worth. But make sure that you do not ignore the potential risks that come with turning your cash into equity by investing in a company.
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