Some investors have trouble selecting which stock markets to invest in. There is no one fits all in terms of shoe size, food in life and the same applies to stock markets. They all have certain advantages and disadvantages to consider.
So what exactly does the best stock portfolio consist of? What stocks does it contain and from which markets?
Read on to find out!
Key Takeaways:
- What market you should buy stocks in depends on your goals
- If you are an opportunist
- If you want good and reliable data
Do you want good and reliable data?
When selecting stocks it is vital to be able to access data that is up to date and easy to find. Only the most used and relevant markets are going to have this vital feature.
When I select my stocks I want to be able to study the charts, find out who is sitting on the board and what the company does. These are the three most important things for me when selecting a stock.
To each their own, but if you have this in common with me you are going to want to buy stocks from the following five markets imo:
The World’s 10 Largest Stock Markets
A table of the five most relevant markets made by Marc Rundquist with canva.com
Are you an opportunist?
Bill Browder ,a British financier, decided to purchase stocks in the Russian stock market right after the fall of the Soviet Union. In his book Red Notice talks about the process of buying shares in companies like Gazprom, Rosneft and Sberbank. As a result he made a fortune and started a successful fund called Hermitage Capital.
On dmagazine.com you can read that Bill Browder created a hedge fund called Hermitage Capital that was worth 4.5 billion dollars at his peak. In his book Red Notice you can read about the strategies he used and how he utilised opportunities that arose.
If you consider yourself to be cut from the same cloth as Bill Browder you should explore these unknown stock markets, because they don’t require huge amounts of capital usually and there is not so much competition.
However there are several downsides. One is that you cannot purchase these shares online via a stockbroker and therefore you will need to either have connections in these countries or establish some connection. Another downside is that the competition might be funded by someone with a way bigger budget than you and they may blow you out of the water.
What goals do you have?
Setting goals is extremely important when purchasing stocks and different markets are good for different goals.
If you are looking to finance your retirement with a 401k or a Roth Ira you should stick with two markets: the Nasdaq and the NYSE. This is because you want to minimise as many risks as you can, because of the guidelines that apply to both of the retirement financing plans.
Guidelines for 2022:
- For workers under 50 years old, the total employee-employer contributions cannot exceed $61,000 per year.
- If the catch-up contribution for those 50 and over is included, the limit is $67,500.
Guidelines for 2023:
- For workers under 50 years old, the total employee-employer contributions cannot exceed $66,000 per year.
- If the catch-up contribution for those 50 and over is included, the limit is $73,500.
Summary
If you just want to make as much money as possible or finance a big purchase of some sort, a house, for example. It is probably best to diversify your portfolio with as many stocks as possible without exceeding your budget. Diversification minimises the risk of your investment while giving you a greater chance at bigger gains. The markets to select when doing this sort of thing is not set in stone and you can select pretty much every stock market.
