New to the stock market? 3 investments you can’t go wrong with

If you are new to investing, it can be intimidating to take that first step and invest your money. With thousands of stocks and investment options, the big question is: where to start? As with any business, it takes time to understand the markets, industries, and companies in which you invest. Even long-time investors learn something new almost every day, as the markets are constantly evolving and changing.

Although the markets are complex, that shouldn’t stop anyone from investing and being successful in them from the start, if you know where to start. Here are three starting investments you can’t go wrong with.

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1. Microsoft: The tech giant, more accessible thanks to fractional shares

If you’re new to investing, there’s a good chance you don’t want to start by investing thousands upon thousands of dollars in a stock. You may not have much to invest, or you may be reluctant to dig too deep into something that you are just starting to learn. A better strategy might be to start with a manageable initial investment and then increase it monthly or steadily over time.

However, a problem for many people is that they cannot invest in many blue chip stocks because their price per share might seem too high. A survey by GoBankingRates found that 55% of people don’t invest because they think they don’t make enough money to do so.

However, you can invest in these big blue names by investing in fractional stocks, available through online brokers. It just allows you to invest in a stock per dollar amount as opposed to stocks. If you only had $ 250 to invest initially, you could invest in one of the biggest companies in the world, Microsoft (NASDAQ: MSFT). Microsoft is currently trading at around $ 340 per share as of Dec. 28, and over the past 10 years it has posted an average annual return of 29.3%.

Microsoft is the second largest company in the world by market capitalization, and its annual profits have grown by around 10% per year over the past 10 years to reach $ 176 billion as of September 30, 2021. Over the past several years , it continued to diversify its revenue streams, through its fastest growing cloud computing business.

This year, Microsoft announced its intention to acquire Nuance Communications, an artificial intelligence company, to bolster its cloud computing business, and Xandr, a digital advertising technology company that it can use with various properties, including the Bing search engine.

This tech giant has been a dominant player for 40 years and will likely continue to be so for many years to come.

2. Invesco QQQ: A diversified investment in technology

While fractional shares are a great way to invest in a top tech company like Microsoft, the Invesco QQQ (NASDAQ: QQQ) Another way to invest in top tech companies is exchange traded funds (ETFs). Invesco QQQ invests in the stocks that make up the Nasdaq 100 Index, the 100 largest US non-financial stocks. As such, around 70% of the ETF is made up of technology and communications services stocks, of which around 16% is consumer discretionary stocks.

The top five titles of QQQ are Apple, Microsoft, Amazon, Meta-platforms, and You’re here.

It has been one of the top performing ETFs, with a 10-year annualized return of 22.6% through November 30 and a return of 10.3% since its inception in 1999. Currently, it is up 28.5% since the start of the year to December 28. .

If you are new to investing, an important principle is time in the market. The longer you invest, the more time your investment has to grow and compose. With a long-term horizon, you have time to navigate short-term highs and lows and achieve the best long-term returns that a growth-oriented ETF like QQQ is likely to offer. The beauty of this ETF is that it is a diverse group of the top 100 and fastest growing companies in the country, so it is diverse and constantly changing with changing markets.

3. Standard & Poor’s Global: profits protected by a moat

Big investor Warren Buffett, CEO of Berkshire Hathaway, often talks about the importance of investing in companies with moats. A moat, of course, is the water-filled ravine around a castle that protects it from intruders. By investing, it refers to a company’s competitive advantages that are so strong that they essentially keep the competition away.

Standard and Poor’s Global (NYSE: SPGI) in fact has two competitive moats in two of its three main businesses, making it a strong enough bet to continue to dominate its markets and generate long-term profits for investors. Its track record shows its remarkable consistency as it has increased its annual dividend for 48 consecutive years. This makes him a dividend aristocrat, and only about 25 other companies have longer streaks. Its stock price has risen an average of 26.5% over the past 10 years on an annualized basis.

As mentioned, S&P Global has two moats – one for its credit rating business and one for its indexing business. It is one of the top three credit rating agencies in the United States and is the leader, with Moody’s, with a market share of 40%. This is a market that is unlikely to be penetrated by competitors anytime soon, as there is a high regulatory barrier to entry and only a few rating agencies are needed.

Additionally, it is one of the few major index providers, and with the rise of ETFs, which pay fees to use indices, it will likely remain a leader for years to come. Like Microsoft, its stock price is $ 480 per share, but you can also use split investing for that stock.

So if you’re just getting started, these are three investments that you should feel comfortable with as long-term games.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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