Methodology

Investing Basics

Module 3

What is a portfolio?

Finding Investments

A common stumbling block that people have when it comes to investing, is that they do not know where to find information about new investments. It is hard for new investors to diversify their investments if they can’t learn about new investments.

 

For example, with stocks, new investors tend to find it easy to think of companies that they know well or have previously used (i.e. Apple, McDonald’s, Coca-Cola etc.), but struggle to develop their portfolio beyond that knowledge.

 

Being able to find investments is the first step in becoming a skilled investor. Without this, it is hard to even get started, let alone to become successful.

Using your investment provider

When you make the decision to start investing, it is obvious that you should open an investment account with a provider. In order to help their clients to become successful, many investment providers offer databases with information that features the investments that they offer. The databases can usually be found in a section called ‘investment ideas’ or ‘find investments’. The databases are typically categorised by investment type, so that investors are not confused about what they are investing in.

 

Stocks tend to be identified using a ‘ticker’, which is an abbreviation that is used to identify a particular stock. For example, the ticker for Apple is AAPL. This information will often be given to you in such databases, making it easier for you to be confident that you are investing in the right thing. A word of warning though, tickers can often be similar, so make sure that you type it in correctly. For instance, AAPL is the ticker for Apple, while AAP is the ticker for a company called Advance Auto Parts – forgetting that ‘L’ at the end makes all the difference.

 

Investment providers also typically offer a ‘research’ section, which will help you to find information about new investments.

Finding new stocks

Looking for new stocks to invest in can be done by using a ‘stock screener’ tool. A stock screener tool allows an investor to search for new stocks, based on certain characteristics. It allows you to search for stocks based on even simple characteristics like country, sector and industry.

 

The best stock screener is offered by the Financial Times and can be found by simply searching for ‘Financial Times Stock Screener’ on Google. Alternatively, Yahoo Finance also offer a stock screener tool that is free to use. After picking the characteristics that you are interested in, a long list of stocks will appear on the screen. You should then simply pick stocks that interest you the most, before analysing and researching them. At this point, you may be thinking that you wouldn’t know what characteristics to look for, but this will be covered in this course.

 

Alternatively, another option would be to go to the website of the stock market of a particular country (i.e. the London Stock Exchange). There you will find out about all of the investments that are listed on that stock market.

That's wrong - try again!