Making a start with stocks can be a daunting prospect. With so many resources available on the internet, it’s often difficult to find reliable information from a trusted source. Before sharing our picks on which investments are suitable for beginners, there are 2 points we would like to briefly mention:
- Risk factor – Purchasing stocks, like with virtually any other investment, has an element of risk. Nobody can predict exactly what will happen to the market, even if they have dedicated their entire life to trading.
- Don’t take any advice at face value – Utilizing the internet is great for generating ideas on which stocks to invest in, but make sure you conduct your own research before making a final decision.
Now that’s out the way, let’s get started with our list of stocks that may be appealing to first-time investors:
1. Lloyds Bank
Currently the cheapest banking stock in the UK, offering a low level of entry for potential investors. Lloyds have solid earnings, with their lowest yearly revenue from the last 5 years standing at £22 Billion back in 2018. This share also offers a regular dividend – which has only been paused once since they were resumed by the company back in late 2014.
2. Royal Mail
Purchasing equity in Royal Mail isn’t for everyone, but we certainly feel like it’s a strong choice. Why? Well – In addition to their large portfolio, the opportunity for this business to grow exponentially is there. More and more people are purchasing items online, and no courier service has really been able to take control of the delivery sector. In our view, Royal Mail is a safe buy that will remain a leader in the postal industry for many, many years.
Another relatively cheap share with regular dividend payments is Centrica, the brand behind energy companies such as British Gas, Direct Energy, Local Heroes and Hive. The proudly display an array of green solutions, which has led to a steep increase in both new customers and investors. As the world grows more conscious of its carbon footprint, we think Centrica will continue to gain popularity (And market share).
If you have a larger bankroll to make your first investment, Amazon is a stock to consider. They have monopolized the online retail space, with a yearly revenue of $280.522B in 2019. Besides developing Amazon.com, the company has branched out in to a whole host of other ventures, such as Amazon Prime, Amazon Music and Alexa.
Love it or hate it, social media is here to stay – Why not cash in on that fact? Facebook has potential for long term, consistent growth as well as an impressive balance sheet. Over 7 million businesses use Facebook to spread their message, suggesting that the company will never struggle to find advertisers. The only downside to this share is that currently it does not offer a dividend to investors.
That wraps up our list – Stocks like Lloyds and Centrica are perfect for dipping your toes in the investment world, taking their track record and price point into consideration. This being said, more expensive shares such as Amazon and Facebook could offer profits over a longer period of time.