One Stock To Rule Them All
Individual Stock Investing
As discussed in Where to Start, you might begin by putting a good-sized percentage of your investment dollars into an index fund or two. Low fees, historical growth, low risk, and zero research on your part. What’s not to like?
However, many of us have companies that we have an interest in or a belief that they are doing good things that will make them very successful in the long run. Whether it’s artificial intelligence (AI), battling climate change, bringing water to parts of the world that are traditionally dry, or using technology to overcome disabilities or disease – they can spark our interest or our hearts and we want them to succeed and we want to go along for the ride as an investor. Investing in individual companies carries a higher level of risk (from the all-your-eggs-in-one-basket category). They can also be rewarding if approached sensibly.
Start by investing a relatively small amount. Then, as the company makes progress and hits milestones in its plan, you can invest more at intervals. Over time, you can build a good-sized position making informed decisions rather than throwing a bundle of money at it right at the start. If they do not make progress or can’t deliver on their promises, sell and chalk it up to a learning experience. Look for a better home for your individual stock money.
OK, but how can you invest in these companies?
The business needs to be listed on a stock exchange like NYSE or NASDAQ where their shares can be bought and sold by anyone (i.e., the public). Then, it is a simple matter to go to your brokerage account (Fidelity, Charles Scwab, TD Ameritrade, etc) and place a purchase order for your company. In order to do this, you need to know their ticker symbol (e.g., Microsoft is MSFT). Search on Google to find it. Once your order goes through, you are an owner of a small percentage of that company and will receive periodic requests from them to vote your shares on company matters. We’ll address proxy statements and voting in a future post.
If the company is not listed on a stock exchange, I’ll have a later post on Crowdfunding to discuss how this new platform allows retail investors to participate in a company before they go public.
Uncle Bill
