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there are two main investing strategies. investing based on prospective growth of the company and finding a stock that is selling for less that it is worth, value investing (buy low sell high). value investing can be challenging to predict even for people who pay attention to the stock markets all day. growth investing is what you should be trying to look for.
to find a growing company, you can look at financial statements and compare one years statement to anothers, check a number of financial statement ratios (quick ratio, current ratio, asset turnover etc) to determine the health of the company and determine if it is growing. remember that when the company grows, each stock increases in value. other ways to help determine if a company is growing is to check for extensive advertising (a company you keep seeing ads for), or to find out what industries are growing now and then find the best companies in those industries. also keeping an eye on the news and the general economy can help. companies that emphasize low prices do well comparatively during tough economic times (dollar general, priceline etc). I try to avoid investing in companies that are so large that they don't have much more room to grow (walmart, toyota, mcdonalds etc)
it is also important to diversify your investments. this means investing in many different companies (at least 5 but 10 or more is best), in order reduce risk. if one company goes out of business, you will have only lost a certain percentage of your portfolio, not your whole life savings.
it would be more prudent to pay off all your debts, starting with the highest interest rate debt first. investing would be better only if you know you can make more from investing than you will lose from your interest payments on debt you owe.
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