Nowadays, our society emphasizes the importance of investing aggressively into stocks in order to obtain a substantial return. I do not agree. I am a firm believer in investing in the stock market to obtain long-term returns. In fact, I believe that investing in stocks in one of the most effective means on investing. Where I disagree with most financial experts is that people should invest aggressively. In my own investing experience, I have learned that investing aggressively many times leads to pitfalls.
My method of investing that I want to share, is to invest in companies that 1) have a tried-and-true good performance record over decades and 2) offer services or products that are necessities. One such company that fits the above profile is FedEx (FDX). FedEx stock continues to rise (i.e. FedEx stock rose 5% in April) because their services are always in demand; it is a necessity to receive packages within a certain time period. Because Fed Ex offers a service that is in much demand, their company stock will not have the volatile returns like other companies experience.
Another example of a company that fits the profile of a “tried and true” company is a utility company such as the Dominion Virginia Power Corporation (DVP). DVP and any other power utility company are great companies to invest in because of the strong need for energy to power businesses, homes, museums, etc. Whether it is fossil or nuclear power, our country depends on utility companies like DVP to generate power needed to maintain a basic lifestyle. Power utility companies stock typically stays in the midpoint range whereby small profits per quarter are yielded. Even more than FedEx, power utility companies are a great stock investment because the need for energy will not be eradicated anytime soon.
Targeted Investing and Research
If you are considering investing in stocks, target companies that provide services or products that are necessities rather than things that can be considered optional. Two examples of businesses that offer services or products that are optional: DVD rental stores and department store chains. In each of these cases, the economy could inversely impact these companies to the point where their stock is plunge into the red zone.
I cannot emphasize enough to do your research on companies before investing in their stocks. Make sure that they constantly maintain a good performance record. Also, stick with the ones that offer products or services that are necessities. Companies that offer products and services that are necessities maintain a good stock outlook despite the condition of the economy; this is the best way to play it safe when investing in the stock market.