How to invest 2000 dollars
Things You'll Need
Select the investment strategy that meets your needs. For example, if you are nearing retirement, low-risk stocks that provide good dividend income are probably what you want to focus on. A young person is more likely to want growth stocks to increase his or her equity. Mapping out your strategy important because it helps you decide the right companies to invest in.
Hunt for possible companies to invest in. Business and financial publications like the Wall Street Journal and Kiplinger's are excellent sources of information about publicly traded stocks. Industry trade journals are another good source. Full-service brokerage firms provide a wealth of research and reports. It may be worth your while to pay the higher commissions full service brokers charge on at least some of your stock transactions (as opposed to a discount broker) to gain access to this information.
Look for income-producing stocks with low risk to provide safety and income. Utility companies are favorites of investors seeking safety and income. For example, companies like Duke Energy (NYSE:DUK) and the Southern Company (NYSE:SO) are historically stable and pay high dividends. This is also true of firms that produce staple products people need like Campbell's Soup (NYSE:CPB). These examples of income stocks are also considered "defensive stocks" because they tend to retain value even during economic downturns. Another approach to finding income-producing companies is to look for the preferred stock of "blue chip" firms like Coca-Cola (NYSE: KO) or Eastman Kodak (NYSE:K). A preferred stock usually has a guaranteed dividend and must be paid off ahead of common stock in the event the company liquidates for any reason.
Put your portfolio
on an equity growth track with common stock in growth-oriented firms. By their very nature, growth stocks carry more risk because the companies in question are expanding into new markets or technologies. However, they offer the opportunity for strong equity appreciation. Many investors made large profits in the 1990s by investing in regional companies like Starbucks (NASDAQ:SBUX) and Home Depot (NYSE: HD), which were young, aggressive firms in the early 1990s and grew into international firms.
Find companies to invest in even if you have limited resources. By 2009, almost 2000 major companies had direct stock purchase plans (DSPPs). These plans allow you to buy stock with an initial commitment of only $250-$500 dollars, payable in $50 monthly installments. The investments are made through "transfer agents" like ComputerShare.com (link below). Transaction fees are low (some companies pay them for you when you buy their stock). Examples of companies to invest in through a DSPP are WalMart, Kellogg's, McDonald's and Duke Energy.
Determine if a company has the track record and potential to be a good investment. No matter how glowing the recommendations of brokers and financial publications, there is no substitute for doing your own research. Go to a company's investor relations website and download their annual report. Look at the company's history to see if it has done as well or better than its industry average. See if it shows consistent earnings and revenue growth. Check the annual balance sheet to assess the current condition of the company and determine if it is positioned to perform well in the future. When you find a company that meets all of these criteria, you have a good candidate for investment.Source: ehow.com