Investing in Stocks to Help Meet Your Investment Goals
When it comes to stock investing, knowing your investment goal is crucial. That, along with your investing time frame and how much risk you're willing to take when investing in stocks, will help you determine how your stock investments should work with the rest of your investment portfolio.
Stock investing can help your investment portfolio by providing potential growth, income from dividends or a combination of the two. However, the value of any stock you invest in can fluctuate, and when you sell your stock, it may be worth more or less than you originally paid. When selecting stocks to invest in, you should carefully consider the risks of stock investing and develop a diversified asset allocation strategy that fits your goals, investing time frame, and risk tolerance.
Note: Dividends are not guaranteed and are subject to change or elimination.
Diversifying your stock portfolio is a way to help offset the risk your stock investments are exposed to. The goal is to spread out your stock investments in different sectors and include different investment characteristics so that when a particular stock or sector performs poorly, the performance of your stocks in other sectors may help offset the swings in the total value of your stock portfolio.
Following are some basic guidelines you can use when diversifying your stock portfolio:
- Invest in approximately 20 to 30 stocks in at least six to eight sectors with different investment characteristics.
- No more than 20% of the total value of your stock portfolio should be in any one sector.
- No more than 10% of the total value of your stock portfolio should be in any one stock.
- You should invest a minimum of approximately 3% to 4% of the total value of your stock portfolio in each stock.
Your Financial Advisor can help you develop an investment mix that's suitable for your situation and investment goals.
Note: Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns nor can diversification guarantee profits in a declining market.
Deciding which stocks to invest in can be difficult, especially if you have a low tolerance for risk. That's why it's important to define one's financial goals and how much risk can be tolerated. Research stocks that fit within your strategy and invest in stocks that have the potential to help you meet your specific goals, whether you want investment growth, income, or a combination of the two.
Your Financial Advisor can provide you with the research reports you need to help make your investment decisions as well as help you select individual stocks for your investment portfolio.
When you invest in stocks through Wells Fargo Advisors, your Financial Advisor can provide you with a wide range of stock investing services, including:
- Asset allocation strategy development
- Individual stock selection
- Help in deciding when to buy and sell your stocks
- Stock portfolio reviews
- Concentrated equity strategies (for when you own too much of one stock, such as your employer's company stock)
- Access to a variety of stock investing programs
- Stock research reports provided by Wells Fargo Advisors and third-party providers, including Wells Fargo Securities, LLC* and Standard & Poor's (among others)
Contact your Financial Advisor for more information about investing in stocks at Wells Fargo Advisors.
*Wells Fargo Securities, LLC is a registered broker-dealer and a separate non-bank affiliate of Wells Fargo & Company.