How to Buy Long Term Stocks


Stock Market          So you have entered the wonderful world of stock market trading. Congratulations, you are now in control of your financial destiny and your profit potential is limitless. Trying to determine which long term stocks to buy can be tricky but with a little help you can be on your way to enjoying the benefits of the financial markets.

Step 1

Open an online stock trading account with a brokerage house. You can pay anywhere from $5 a trade to over $20 a trade. Do some research on a few online services and determine the best one to suite your needs. Each one offers slightly different service, such as charting tools, real time quotes, and optional broker assistance. Each one has varying requirements to sign up such as how much money you have to put in to start with and how many minimum trades you need to make per month to qualify if at all.

Step 2

Sign up with some stock information websites online as well as stock trading forums. You can use these sites as valuable tools in your research including looking up stock ticker prices, technical analysis, stock trading volume, among others. Many of these sites start off free but charge to use special features such as if you subscribe to someone’s personal stock blog. In addition many sites have tutorials for trading beginners to learn the fundamentals of the stock market.

Step 3

Since you are looking for long term stocks, begin researching the stock tickers of the companies you are interested in trading. Look for companies that you believe have strong fundamentals as well as long term growth potential. You want stocks that are solid in their foundations as a company but also ones you can see the opportunity for an uptrend in the future so you can make money. Examples may be something like a company that is going to release a new product, or a company that recently won a big contract to sell their product and expand production, or a company that is cutting its costs and increasing their profit margin quarter to quarter. In any case your research is the only way to determine the winners from the losers so never stop studying the markets.

Step 4

Purchase stocks that offer a dividend. Many well established large lower risk companies tend to offer stock dividends with the purchase of the company’s stock. A stock dividend is a payout sometimes made once per quarter, of a certain amount of money based on how much stock you own for as long as you own the stock. For example if a company is offering a dividend on its stock of 12 cents a share, then you will receive a payout of 12 cents for every share you own. If you own 1000 shares of the company then you will receive 120 dollars as your dividend.

Step 5

If your stock is doing well hold on to it for over one year. After the one year mark your long term capital gains tax rate is lowered from your standard income tax rate to 15%. This means that any stocks you hold for over one year before selling them are only taxed at a rate of 15% in the United States.

Step 6

Diversify your portfolio. This means own many different types of stocks rather than just one or two. In other words don’t put all your eggs in one basket. The reason for this is that in case one or two companies in your stock portfolio do particularly badly, the rest of your positive assets can offset the losses from your failing securities.


Additional Advice

                   The financial markets are a constantly evolving entity. So keep up to date with information about all the stocks you own even if you’ve held them for a long time, because things can change that may affect the outcome of your stock and an ill informed stock trader is just as bad as a non informed one.

                   Keep on the lookout for new long term stock trading opportunities; you never know when one will come up.

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