Being able to pick a good stock is what makes investing in the stock market work. Unless you can do this, you will not be successful in your investments. Manypeople allow their broker to pick their stocks for them. I would suggest that you should develop your own system and see if you can move away from a dependence on your stock broker. If you were to do this, you would be able to have an online investment account and save some money on brokerage fees. Some stock picking tips to help you are as follows:

You should be your own person. Study and learn what makes up a good stock. Find out how to look at the fundamental and technical analysis of a company. Look at what indicators were present when a particular companies stock did well. This means looking back at some history. This shouldn’t be that hard. In your studies you can find what others suggest as good ideas, and then test them with actual historical results.

After your research, establish your entry criteria. You should only search for those stocks that fit your criteria. Be patient and wait for the investments to meet your criteria. Do not panic. You have established in your mind what will make up a good investment entry point. Do not let what you may hear or read affect your decision making.

As soon as you find a stock or a situation that fits your criteria, then act right away. Do not try and second guess if this is right. You have established what makes a good investment, now have the courage to act on your research.

Be consistent with your investment strategy. You should also have a determined exit point. This would be events dealing with either fundamental or technical analytic occurrences. When you have reached your exit point, then get out of the stock and move on. If you have acted right, you have probably made a good profit from the stock investment. Find another stock that will allow you to repeat this successful action.

Be able to exit a loser when you need to do so. Too many times we become emotionally attached to a stock, or are afraid to pull the trigger to minimize our losses. You should be able to pull the trigger, and walk away from a mistake.

Mutual funds are a great way to spread your risk over many different stocks without having to invest thousands of dollars. It is important to do some research on how mutual funds work and what to watch for when evaluating mutual funds.

A mutual fund is a company that pools money from many different investors and invests that money in stocks, bonds, money-market instruments or a combination of different investment assets. Each investors share represents a portion of the assets contained within the mutual funds holdings.

Investors purchase mutual funds from the fund itself or from other brokers. The price is determined by the mutual funds net asset value (NAV). The price paid is the NAV + the associated commissions and fees which the fund has. Mutual funds can be sold back to the fund or to the broker which markets the fund. The investment manager determines which percentage of different stocks the fund has and which stocks. This is determined somewhat based on the mission statement of the fund. This advisor is held to that statement for his decisions.

When you purchase stock from a broker, you end up paying for that broker’s commission and the fees for the firm he or she works for. The same applies to mutual funds. Each mutual fund carries with it fees that need to be paid. These fees can be annual fees, on purchase fees, at exit fees. It is important to review the fees associated with a mutual fund, so the investment becomes as profitable as it can be. There are different classes of funds and the fees are different for each class. The classes are Class A, Class B or Class C shares.

Some negative things about mutual funds are the lack of control over the fund. The investment manager makes the decisions on what to purchase and how much. The industry invested in is also based on the funds mission statement. The costs associated with the fund can also be a bad thing. Even if the fund is losing money, the fees are always there. The value of the fund is also an uncertainty. With stocks, you can watch the value by the minute. The value of the mutual fund is generally calculated after the market closes. Until the value is determined you really do not know what you have. Also when you initiate a purchase, you really do not know the price you are paying for the fund. It is determined after the close of business on the day you placed the order.

Stock funds are not all the same. They fall into different classes. For example, there are funds which invest only in growth funds. Some invest in dividend producing funds. There are also funds which are known as index funds. These index funds invest in the market as a whole. For example, the S&P 500 index fund follows what the S&P 500 is doing. Funds can also invest in specific industries and are known as Sector funds.

There are basically three ways to make money with a mutual fund. One is based on the dividends paid out by the holdings. Another is when a stock being held is sold. The capital gain is distributed, usually at year-end, to the investors. Also an increase in the NAV will create an increase in the funds value.

All funds carry a degree of risk. Before investing, it is important to read the prospectus and review what levels of risk the fund carries, what it is authorized to do with your funds and what the fee structure is. A review of the investment manager’s resume and success ratio is also warranted.

It is also important to remember that a fund may have a banner year and be in the toilet the next. Even an impressive ten year history is no indication that the fund will continue to do well. As with stock purchases, it is important to review the industries the funds invests in and if those industries are currently growing. In late 2008, investing in financials or real estate would not have been a good idea.

You should also balance your investments to reduce your risk. You should set a goal on how many funds you will purchase, the strategy each fund will have and your percentage holding in each fund. At the end of the year, one fund may have increased in value by 30% while another fund decreased by 10%. Your determined percentage holdings is now out of balance. Sell some of the fund that increased in value and buy more of the fund which decreased. Bring the percentages back in line. Doing this at the beginning of January of each year will be beneficial to you.

To summarize then. To make your mutual fund investments work for you, read the prospectus carefully (it is boring but needs to be done), read the other information provided that details how the fund has and is doing, reduce the fees, choose growing or dividend paying funds, balance your portfolio annually.

All of the content published on this website is to be used for informational purposes only and without warranty of any kind. The materials and information in this website are not, and should not be construed as an offer to buy or sell any of the securities named in these materials. Trading of securities may not be suitable for all users of this information.