Three Traits To Look for In A Starter Stock (and One to Avoid)
So you've opened a brokerage account, funded it, and are ready to find your first investment. It's easy to be overwhelmed by the hundreds of publicly traded companies out there. Not only is the sheer number of companies difficult to wade through, but the idea of making money fast is incredibly tempting.
Unfortunately, when you buy a company with the goal of doubling your investment in the short term, you are less of an investor and more of a gambler. These short-term plays are often incredibly risky, subpar businesses, and will ultimately burn you. Companies like these tend to appear incredibly cheap, and with good reason.
While different parts of a portfolio can accommodate more risky investments, a starter stock should be held for the long term -- at least three to five years, or preferably longer. Your first company should be a cut above the rest, something to be proud of, but where do you start? Be on the lookout for these three traits:
Source Fool.com
