Step 1: Determine your overall stockpicking strategy
Decide whether you want to do it yourself.
We believe that most people are capable of handling their own investments. However, it does require thought, research, and monitoring. If you don't feel that you have the time or interest to do it yourself, you may want to get help from a financial professional for stock selection, portfolio management, tax planning, or any other aspect of your investment decisions.
Decide whether to invest in stocks.
If you're using this tool there's a good chance you've already decided to invest in stocks, and you may even have a strategy already, but it's worth pointing out that stocks aren't for everyone. This section will help you decide if they're right for you, and what strategies might be best for you.
Consider other investment options.
You should also consider investing in mutual funds, exchange-traded funds (ETFs), and bonds, instead of or in addition to stocks.
Consider how stocks fit into your overall portfolio.
Consider your overall situation and personality.
Some factors to consider include your age, how far you are from retirement and how close you are to your retirement goals, and what your tolerance for risk is. These factors will probably affect both how much of your portfolio is stocks and which specific stocks you choose. For example, if retirement is far in the future and you are not averse to risk, you'll probably want to put more of your portfolio in stocks and might focus on growth stocks, whereas if your retirement is coming soon and you are risk-averse you might buy fewer stocks and focus more on income stocks and stocks with high dividend yields.
Factor in tax considerations.
Different types of investment gains (and losses) are taxed differently, and it's important to factor this in to your overall investment strategy. You may also want to consult with a tax professional.