What are the best stocks to buy for beginners?
Becoming a skilled investor can lead to life-changing wealth. Even so, its important to start slowly. In my opinion, the best stocks to buy for beginners are those that are large, easy to understand and defensive. Lets briefly look at each of these qualities along with a few examples. Go large  If I were new to investing, Id stick to buying shares in big companies. This might mean only picking stocks from the FTSE 100 index  the Premier League of the UK market. 5G is here  and shares of this sleeping giant could be a great way for you to potentially profit! According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air And if you click here well show you something that could be key to unlocking 5Gs full potential...  One benefit of larger company stocks is that theyre highly liquid. In other words, theres usually a buyer for every seller. In practice, this means I should always be able to sell if I want to (although doing so in a panic should be avoided). Contrast this with smaller companies where it can sometimes be a struggle to find a buyer at a good price. Thanks to their clout and financial stability, larger companies can also ride out inevitable periods of poor trading. Having said this, the size of a business matters little if I dont understand it. This brings me to my second point. Know the company  As an investor, I must know how a business makes its money. Otherwise it becomes harder to predict whether it can do well in the future. Being a customer helps. Two great examples of this are drinks giant Diageo and consumer goods firm Unilever. I know the former owns some of the most recognisable brands consumed in my local pub, such as Smirnoff and Guinness. The latters products are in most kitchens and bathrooms. US tech stocks like Amazon and Apple also fit the bill and are potentially worthy of inclusion in a new investors portfolio in time. Theres nothing especially complicated going on here. If Im struggling to appreciate the basic business plan, its not for me. Be Defensive  Defensive companies sell products or services that are in fairly constant demand. This predictability makes them the best stocks to buy for beginners, in my view. For me, this would include supermarket giant Tesco. After all, everyone needs to eat. Moreover, a quick web search confirms that Tesco is the clear market leader. In fact, all the companies already mentioned strike me as pretty defensive. I know Ill continue buying Marmite (Unilever), most probably from Tesco. Ill also continue to order stuff through Amazon and make calls using my iPhone. Put another way, defensive companies are not the sort I might read about on Reddit. These meme stocks just dont have the solid fundamentals to back up their big price gains, making them very volatile. For me, the best stocks to buy for beginners are those that get on with things without much fanfare. Some people simply dont have the time to fully research businesses, so stock-picking isnt essential. On top of this, investing in even the biggest and best-known stocks is never risk-free. As the 2020 market meltdown showed, most share prices fall when negative global events occur. If Im put off by either of the above, allowing a professional (or computer) to invest on my behalf may be more appropriate. Accordingly, some beginners might be better suited owning a bunch of active and passive funds rather than single company stocks.