It wasn’t my idea

I guess I can’t take credit for the idea then. But I don’t think Tim Hanson can either. I’m sure we are not the first people to come up with the idea of buying stock in companies that seem to be undervalued… isn’t that part of Warren Buffett’s mantra? And to buy stock in companies who give a nice quarterly dividend? Well, who wouldn’t think that some of the best stocks to buy are going to be those that, in addition to growing over time, again because they are undervalued, are also those that are going to give you a decent little chunk of change every quarter that you can withdraw, or preferably reinvest back into more shares of the same stock? It just makes sense.

Great stocks abound

The point here is that you can find good stocks to buy wherever you are looking. There are roughly 3000 dividend paying stocks in the stock market, so that gives you a large base from where you can begin to drill down and look to find those that are from the well established, yet undervalued companies that I was referring to. This to me is a much more sound plan for the long term than trying to get involved in what Is the latest best stock to buy, here today but gone tomorrow type of approach. This is the approach that gets you somewhere in ten years, twenty years, as opposed to only being able to look back and count your never ending per-trade fees because you thought you would day trade your way to millions in a couple of months.

Slow but steady wins the race when looking for good stocks to buy. A plan like the one above, executed over time is sure to increase your stock buying portfolio in ways you hadn’t imagined.

Long term is a good phrase to end on when talking about the best stocks to buy, because that is what I focus on. Let me start by saying that what I do in no way resembles the idea of ‘day trading’ or the way some people will buy penny stocks in order to take quick advantage of small fluctuations in price. I am in this for the long-haul and want to buy stocks that are going to appreciate over time. In my opinion, these stocks are those that come from well established companies that for whatever reason, at the time of purchase are under-valued; trading for much less than I think the company is worth. Remember that a stock’s price will rise and fall in value NOT based on a company’s value or performance, but whether people are currently mostly buying or selling that stock. When people are very bearish on a stock that to me seems like a good company that is only going up and up, I feel I have a winner.

The answer to how to buy stocks lies not in ‘how’ so much as ‘when’. When I find a company like the ones mentioned above, I like to buy on dips. Those are the exact moments when I feel like the company is under-valued, and will continue to go up in price over time. The only other criterion I will really focus on is dividends. I like to see a company that will pay me a good dividend; one that I will reinvest of course, for further compounding effect. For me, that is all there is to stock buying. The question of what stocks to buy should really be what kind of stocks to buy, and that is my answer. I like to buy stocks online in this fashion for the simple reason that I can know that I am adding to my ever-increasing portfolio, from the comfort of my own home, and at a relatively good price, seeing as buying stocks online costs no more than a few dollars per trade.

Still, there are few better ways to prepare for retirement and make good money, than buying stocks. To be honest, I think the problem boils down to how people go about buying stock, more so than the simple fact that they buy stock at all. I’ve made mention before that the stock market falling is not bad for everyone. Again, if I’m not just about to retire within the next few years, I don’t want to try and buy stocks when they are at their peak. Knowing that over the time the market his always risen, I would much rather be involved in stock buying when the market is low, getting more bang for my buck and then holding on for the long term.

That being said, I won’t profess to tell you what stocks to buy or even really how to buy stocks at all. I’m no professional. I suppose I can tell you however, how I play a situation like this and what I intend to be doing for the foreseeable future.

It is my personal opinion that when buying stocks the best stocks to buy are those that pay a good, solid dividend (with the idea of reinvesting these dividends), and that these dividend-paying stocks be of reputable companies that have stood the test of time. I’m interested in how some people try to buy penny stocks at six cents per share, hoping it goes screaming up to nine, that’s just not my style. That quick ‘buy stock online’ idea to sell it a few minutes later can be dangerous, and isn’t the sound, long-term investment approach that I’m going for.

Instead, I am looking to add shares of stock of the above-mentioned type of companies, and to continue to buy on dips, such as the severe one most companies saw around the end of 2008. These shares will average out and continue to add up, all the while paying out their fantastic quarterly dividends that will be invested back in for further compounding awesomeness. I truly believe that over the long-haul, that is how to buy stock. There is no need to work your tail off at the stock market, let the market work for you over time when buying stocks.

So, how to buy stocks online? The first thing you will need to do is open a stock trading account with the online broker of your choice. There are quite a few reputable companies out there, but suggestion is to do a simple Google search, and find reviews on the many different online brokers available to you, and see what the people in the trenches are saying about their brokers right now. Buying stocks should be a good experience, but with the wrong broker it can be far from it.

When you have set up with your online broker of choice, you will need to fund your account with money. Different brokers will allow you to fund in different ways, and also have different minimums that you will have to fund your account with. Those would be just a few of things that you would want to look at before opening an account with an online broker. When you do, you will be set up with what is called a trading platform. That is how to buy stock online. Stock buying using a trading platform is simple, and really just a matter of point and click. There might be a bit more to it, but the best way to figure it out is to play around with the platform. I wouldn’t do this using your hard-earned money, however. Most places will allow you to open a dummy account, in other words, an account with $50,000 in fake money so that you can practice buying stocks online without any risk to your capital.

How to buy stocks doesn’t need to be a difficult question to answer, the real question lies in what are the best stocks to buy, once you set up online. Good stocks to buy abound, but you will need to be looking in the right places. I would typically avoid the hot trends of looking for penny stocks to buy, and other more risky moves, and sticking with reputable, long-term companies that pay dividends when you are looking for the best stock to buy for your personal portfolio, and especially so if you are just starting out. There are countless places online that give good, sound advice on what stocks to buy, based on years of cumulative experience between many different professionals. Keep things simple and realize that you are in the game for the long-term, and your chances of coming out fine greatly increase.

Yes, that’s right, the internet. If you want to know how to buy stock, or know how but want to know what the best stocks to buy are, the internet can be your best friend. One of my favorite sites is the Motley Fool, which gives great advice on not only which stocks to buy, but also what sort of things to avoid when buying stocks online. You’ll even find the occasional interview with big guns such as Warren Buffett.

I won’t be putting any kind of a top 10 stocks to buy list right here, as a list like that would of course be both personal opinion, and ever-changing. What I will mention however, are a few of the things that go through my head when I am looking for good stocks to buy.

When I go to buy stock online, one of the first things that I will look for is a stock that is under-valued. Obviously I can’t stake claim to this idea, a lot of people look to do just that. The point to remember however, is that stock prices are not directly affected by how well a company is performing, or how good their outlook is. Stock prices are dictated by supply and demand, are there more people wanting to buy this stock, or sell it off? It just so happens that on occasion you can find more bears (people looking to sell), for whatever reason despite the fact that the company is a great one, with a bright future ahead. No one can predict the future of course, but that is one of the first things I will look at when considering what stock to buy.

My next move is that I will take this sort of ‘top stocks to buy’ list that I have created, from much research using the above tactic, and look for something very specific. I want to see a good dividend. That’s right, I want to see a company that pays good dividends, with the sole purpose of course of reinvesting those dividends right back into my portfolio. Many a millionaire has claimed that this at least in part is a reason to their success. Don’t ever underestimate the power of compounding your returns by reinvesting your dividends.

Lastly, I want to find those reputable companies that have stood the test of time. Although it works for some, I’m not looking to buy penny stocks, or for some guru’s latest ‘hot stocks to buy’ list. I want to buy stocks from the large companies that have been around, pay a good dividend, and will be around forever. Not every purchase of stock will be a long-term winner, let’s be honest. But this strategy is the one that I follow, and will continue to do so for as long as I plop down next to my computer with the question of what stocks to buy today.

Yes, I said it, but I suppose now I have to explain, and let me preface this by saying that I AM NOT with 5-10 years of normal retirement age. If I were I might be singing a different tune. Here’s the deal. Based on history, reinvestment of dividends and the fact that I like to buy stocks at a lower price, rather than when they are close to peaks, I prefer a bearish market. I want the best bang for my buck right now. Unless you are within 5-10 years or so of retirement, you should want the same thing.

It isn’t too different than other markets. Would you want to buy a house when house prices are up towards their peak, just because as of late house prices are screaming up? I hope not, because after the boom comes the bust. This is also how to buy stocks. Buying stocks and buying real estate are similar, and it sounds rudimentary I know, in that you want to buy low, and sell high. I know you have heard that mantra, but you’ve got to apply it too!

So what are the best stocks to buy? Well that is a debate for another time, but what I do know is that on any given stock, I’d rather buy it cheaper than more expensive. I know… duh.  Stock buying doesn’t need to be rocket science, or any kind of science for that matter. Just know that you are in it for the long-haul, that this is to secure your future one day down the road, and not next week, and you’ll feel a great sense of relief as you suddenly realize that your portfolio losing 38% in one year, is not the end of the world… and not even the end of your journey to buy stocks for your future.

So what do you do now? Well for one thing, you don’t panic. Know that when the market is going against you, it is often a blessing in disguise. Set up shop with your preferred online broker to be able to easily buy stocks online, and begin to do so as your funds warrant. I won’t be spouting off some sort of ‘best stock to buy’ list, but I can tell you some of my favorite things to look for: I like to buy stocks that seem to be under-valued, and that pay a good dividend. I am also partial to well-known companies, the Coca-Cola’s of the world. In the end of course, buy stocks how you feel comfortable, and how you see fit.