A critical step in investing is picking what stocks you want to buy. Or what index funds, ETF's, mutual funds, etc. There are a few things I do to understand what stocks I want to buy.

1. I assess how much money I have to invest.

If I only have $100 I know I can't buy an Amazon share. With limited funds, your options are a bit limited on whole stocks to buy, so you need to look at other options.

2. Look at what you are already invested in.

If you already have 2 Apple shares and nothing else, it may be time to diversify your portfolio. You should never be invested in only one sector -aka all of your stocks should not only be in tech or energy or food. You want a little bit of everything.

3. What are your goals with your investments?

do you want a safe investment that is very likely to bring you 7-10% a year, no more no less? Or are you more risky? Do you want to bet on an up and coming company that might bring you huge gains or might bring you nothing? I think having mostly safe bets with a few risks can be a good blend for me. You need to know how comfortable with risk and what you want.

4. Do you have moral and ethical beliefs you want to prioritize in your investments?

Are certain companies off-limits for you? Maybe you don't want to have any oil companies in your portfolio or want to have renewable energy investments. Prioritizing your investments according to your values is very possible with a little research.

So now you know your budget, existing portfolio diversity, goals and risk adversity, and your investment values, now what?
Now you have to decide which stocks to buy.
I am going to break this down in two categories, first: choosing individual stocks, and second: choosing index funds of E T F's (which are big baskets of stocks).

Choosing Stocks:

Picking an individual stock to buy can seem very scary because it seems like you are putting all of your eggs in one basket. But I wouldn't look at it that way because while buying one stock may be scary if it fails, if you keep on going with investing, that one stock you buy will just be one of a bunch of different stocks you own. Don't let nerves get in your way.

When I am looking to buy stocks I first think about my life. What products do I use? What products do my friends and family use? So for me, I use Apple products, and so does nearly everyone I know, so I decided to buy some Apple stock. Then since I bought a tech stock, maybe next I will buy a manufacturing company, then next an energy company, etc etc. This is not exactly a very advanced way to look at it, but I think in the long run it will work out as my portfolio grows.

Now while I look at these things first, before I make any decisions I of course do some research on the companies. I use https://www.investopedia.com/ and honestly just google the stock or if I'm stuck on what I want to buy I will google "good stocks to buy right now." Yes, I am that person. I also frankly will ask people I know who are also invested in and knowledgable of the stock market. I do have an unfair advantage as my mom was once a stock broker and still keeps in touch with her stock broker friends. If you have the money to invest, you can reach out to a financial advisor or stock broker. I recommend choosing one that charges per hours rather than percentage based. Get references and make sure they are the right person for you.

I am sure some people may be laughing at me for this very low-brow strategy of choosing stock- I think that even picking a few stocks will be better for me than picking none and just letting my money sit in a savings account. So I try not to worry too much about the stocks because as long as you have even a few stocks, you are likely better off than having none and just having your money under your mattress. Now if you do not want to pick an individual stock- here is your next option:

Choosing Index Funds and ETF's

Picking these is a lot easier. If you just broke into a sweat and started mad man googling stocks while reading the previous paragraph, then you should start here and stick here for a bit. This is where I prefer to invest because it is not risky and it does not require much research. How to pick an Index Fund or ETF only requires googling "best index funds" or "best ETF's" and doing 10 minutes of research. Again, https://www.investopedia.com/ is a great resource.

What to look for in these is a low expense ratio (0.03% is great, so somewhere around there is good)and a history of good performance. You also want to diversify your ETF's and index funds by being invested in different markets. So for example if you buy VOO you are buying an index fund that tracks the S&P 500 Index, so next you may want to buy QQQ which tracks the Nasdaq 100, and next you could buy SWTSX which tracks the total return of the entire U.S. stock market.

Once you have a good overall market ETF or Index fund (you do not need to pick multiple as they are all tracking the same thing) then you can move on to a small-cap index fund or ETF. These index funds track the Russell 2000 which measures the performance of the 2,000 smaller companies. This is great to diversify because so many of the larger companies are tech, so these smaller companies will be not just tech but in many different markets. You can also invest in mid-cap and international index funds and ETF's to make sure you portfolio is diverse.

One thing you need to make sure you know is that where you have your brokerage may determine with ETF's and Index funds to buy because it will determine if you pay a fee. So if you invest with Schwab, you will want to buy Schwab index funds, and if you invest with Fidelity, you will want to stick with Fidelity for ETF's. Of course some index funds and ETF's are not linked to these brokerages (iShares, Invesco, etc) and those are fair game.

So even in ETF's and Index fund you can seek diversity of your portfolio without having to do much research.

Now get started investing!

This may seem like a lot, but all it requires is just an hour or two of thinking and research to set you up for a lifetimes of financial stability. I am proud of you and I am sure you can invest successfully. After all, if you every want to retire with a certain degree of financial comfort, you will need to have investments. Starting early just means you have more time to practice and perfect it. Investing is like any skill, time and practice will yield results, you just have to start. Pick those stocks!

How to pick stocks