Saturday, 28 November 2009

Choosing the Right Tools

You can't have everything.  Where would you put it?

Imagine walking into a home improvement superstore with only a vague idea of what you want to buy.  You could spend hours wandering up and down aisles looking for the right tools.

Investments are tools you use to achieve your long-term financial goals and choosing the right tools is critical to your success.  The universe of possible choices is huge.  There is a virtual superstore of more than 2,800 companies listed on the New York Stock Exchange, nearly 3,500 listed on the Nasdaq and thousands more listed on other exchanges in the US and around the world.  In addition to stocks, there are:
  • commodities,
  • real estates,
  • bonds,
  • annuities,
  • options,
  • hedge funds,
  • mutual funds,
  • futures contracts, and on and on.

One of the beauties of investing for dividends is that you can limit your search to just stocks - and to just those stocks that pay dividends.

How do you conduct your search?

How you conduct your search will play a large part in how many stocks you'll be able to choose from. 
  • If you're using a computer, you may be able to access, download, or process thousands of potential candidates. 
  • If you're conducting your search by hand, you may be looking through the stock listings in the newspaper with a highlighter. 
In either case, your goal is the same:  to find a manageable list of stocks that meet your initial criteria. 

Over time, these will become familiar friends.  By tracking their fortunes over the years, you can gain a solid understanding of their underlying value and potential future prospects.

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