Evergreen Stocks, ETFs & Bonds to Buy and Hold for Beginners In 2022
Two psychologists, Sheena Iyengar, and Mark Lepper decided to conduct a strange experiment in a supermarket. Customers were given a chance to taste and buy bottles of jam. Half the time of the experiment, they kept 6 jams to choose from, and the other half kept 24. Ideally, when there are more options, the consumer should be able to find a jam that matches their taste, and that should lead to a purchase. Yet the opposite was found. Out of the customers presented with 24 Options, only 3% bought the jam. And in the group presented with fewer options, 30% of them ended up taking one home.
When it comes to choices, sometimes less is more. And this analogy is very much applicable to investing in the stock market. There are around 4000 publicly listed companies. And that's in the U.S. alone. And for someone who is starting their investment journey, picking a few from them could be overwhelming.
Therefore even if you have the money, the chance of getting stuck in this decision paralysis mode and not investing is high. And with the current inflation rates, every day you delay investing you are losing money. We don't want that to happen. Do we? As a beginner, you will be more inclined to play it safe than making huge profits. So I will give you here the names of some of the best-performing low-risk equities that you can buy and hold forever. This is not by any means a perfect list. But this is where I started and I believe could be a good place for you to start as well. Remember to take these recommendations as my personal opinions and do your research before investing your hard-earned money.
Ideally, when it comes to the stock market, you just need to worry about 3 options. Stocks, Funds, and Bonds. All you need to have is a portfolio that involves one of these, or two of these, or all three in some proportion. You can check this video to create a balanced portfolio based on your personal goals and risk level.
So let's start with stocks first. There is no magic hat that can spell out that next big stock, all we can do is make some calculated guesses. It would be a good strategy to stick to those with low volatility when you are in the beginner learning phase. That means the stocks of those blue-chip companies that don't fluctuate a lot. True, they won't be growing as fast as the riskier ones. But then use these initial periods to get yourself familiar with everything before jumping to take more risks.
There are two classes of stocks, and which one you choose depends on your motive for investing. If you are not worried about immediate cash flow and are looking for long-term returns, the ideal option would be growth stocks.
Growth Stocks
Growth stocks are the stocks of those companies that reinvest a good part of their profits back into the company to grow more. So now, let's see some of the popular growth stocks you can buy.
Amazon
The growth this company has achieved in the past decade is just extraordinary. Something that started as an online bookstore out of Bezos's garage is now sending people to space. Amazon not only dominates as an eCommerce leader but has its foot in multiple sectors from cloud services and online Streaming to space exploration. It's challenging for others to compete with a company of this magnitude. You can't go wrong by owning stock in Amazon. Amazon stock is currently valued at 2914$ and has the symbol AMZN.
Meta
Originally called Facemask, Facebook started as a small online community of Harvard students and then outgrew into 3.6 billion "monthly active people" customers. That is roughly half of the world's population. And now they are moving beyond social apps to build a digital universe that offers an interconnected set of experiences. Facebook has always had its share of controversies, but it hasn't stopped the company from growing to generate $ 117 billion in 2021. Their stock is currently valued at 186$ and can be found with the symbol F.B
Tesla
Tesla has always been a controversial stock, thanks to its owner Elon Musk. The value of the stock and the company depends totally on this man and what he does. Their vision is futuristic, and they have shown that they can deliver on their promises, even if that happens a bit late. Tesla is the leading player in the E.V. market. They also manufacture and sell their battery systems and solar technology equipment. Even flamethrowers. This is an investment you can make for the future. Not the flame thrower, I meant the stock.
Do you wish you had invested in Apple when the company was starting to be a global player? Now you can make that wish true with Tesla. Tesla, in a way, resembles Apple under Steve Jobs. It would sure be a bumpy ride with Tesla, but this is one ride that would probably take your money to the moon. You can buy Tesla stock for $838.05 under the symbol TSLA.
Netflix
You know Netflix, and most probably, you own a subscription. Netflix is the market leader when it comes to streaming platforms. Its subscriber count and revenues peaked during the pandemic, but once people started spending less time in front of the TV, the growth reduced. Also, there is intense competition from the likes of Disney, Apple, Amazon, and HBO. But people will always need entertainment, and as long as they can deliver quality content, like the squid games, they will stay in business. Stock is currently trading at 344$ from the pandemic high of 690$ and can be bought under the symbol NFLX.
Walt Disney
This is one company that can entertain you and simultaneously make you money. Like many companies, the last 2 years were a tough time for Disney. The pandemic had a drastic hit on Disney's revenues from theme parks and cinema. Disney stock tumbled more than 40% during this period. But I guess the worst is over. The theme parks are getting busy again, and people are back in cinemas. The company and the characters are loved by a lot, which will ensure that it has a future. And it is not just about animations and theme parks. They also own ESPN, ABC, and Marvel Studios. They will celebrate the 100th anniversary in 2023, and not many companies get to celebrate one.
But what if you are someone who is not looking for a long-term return but needs a regular income from your investments, then the best option would be to go for a dividend stock.
Dividend Stock:
Dividend stocks are the ones that pay a regular dividend either monthly quarterly, or yearly. I And there is no better option to start the list, than with a company that has raised its dividends annually for more than 59 years.
Coca Cola
And that's the dividend king Coco Coca-Cola. This non-alcoholic beverage company has refreshed us for over a century now. Coca-Cola's dividend yield is 2.90%. Yield is the ratio of dividends paid by the company to its stock price. The company committed to this payout, despite a poor showing during the pandemic. That shows where its value lies. Their revenue from international markets is growing consistently as economies recover across the globe. This company is, without a doubt, a strong value addition for any portfolio with a long-term view. Stock is currently selling at 59.46$ under the symbol K.O.
Johnson and Johnson
You're not going to find many dividend stocks with more impressive credentials than Johnson & Johnson. It now stands as the largest healthcare company in the world. Johnson & Johnson's biggest strength is its diversified business model that provides stability in all kinds of economic cycles. It operates through three segments: Consumer, Pharmaceutical, and Medical Devices. It has a portfolio of drugs that treat everything from cancer and cardiovascular diseases to immunology and infectious diseases, including the covid 19.
J &J is a Dividend King with 59 consecutive years of dividend increases. Although the company is fighting some legal issues, the company reported rising sales and net earnings in 2021. The yield is currently 2.5% and the stock can be bought under the symbol JNJ
Jp Morgan
JPMorgan is an old and storied name in banking and is the biggest U.S. bank by market value. Since the 2008 economic crisis, few bank stocks have performed more consistently than JPMorgan Chase. Its performance record is consistent. Thanks to its efficiency, rock-solid balance sheet, and revenue diversification. JPM offers a yield of 2.2%, which is above average. This is a solid choice for those who wish to invest in a low-risk and stable stock option in the financial industry.
Procter & Gamble
You may not have heard about this company. But you may know the powerful brands under its wing. Tide detergent, Pampers diapers, Gillette razors the list goes on. They are among the world's largest consumer product companies. The products the company sells, such as toilet paper, toothpaste, and soap, will always be in demand, making the company kind of recession-proof. P&G has paid shareholders a dividend since 1891. The current yield is around 3%, and the ticker symbol is P.G.
3M
3M is a powerhouse of a company, with a massive portfolio of products spread across such sectors as safety and industrial transportation, electronics healthcare, and consumer. This is another company that makes everything under the sun. So by investing in this company, you are diversifying automatically across different product lines. 3M has survived and thrived through a pandemic, the great recession, the dot com bubble, a world war, and many other downturns. Today, 3M is offering investors a 3.2% dividend yield. It has also increased the annual dividend for the last 63 years and is one of the best income opportunities today for long-term investors.
Mc Donalds
McDonald's is one of the most recognized brands globally and is a dividend stock that investors shouldn't overlook. This is a dividend aristocrat and has been increasing its dividend for 45 consecutive years. The global foodservice retailer with over 38,000 locations in over 100 countries has strong fundamentals to withstand almost any downturn. They are also innovating by including testing plant-based burgers in their menu. MCD stock won't make you super rich, but it will deliver both income and growth in the long term. The yield is around 2.4%, and the symbol to watch out for is MCD.
Apple
If there is a stock that can represent the best of both worlds, that's Apple. The tech giant is both a growth and dividend stock. They became the first company globally to reach a market capitalization of 3 trillion dollars. That's more than the GDP of 186 countries, and only the U.S., China, Japan, and Germany are ahead of it. The company that once went almost bankrupt, made a tremendous comeback under Steve Jobs and is doing well under the leadership of the CEO TIM Cook.
Apple pays a dividend of 0.5%, but considering how much the company has grown in the past years, this is one stock you can't miss having in your portfolio. Apple stock is traded on the NASDAQ exchange under the ticker symbol AAPL and is trading at around 160$ per share.
Visa
Millions of people use their visa cards for transactions every day, and that's the company’s strength. There are around 3.6 billion Visa cards in use, making them the largest credit card network globally. The payment network took a big hit on its revenue during the early stages of the pandemic. Now, it's rebounding along with the economy. Visa Inc. currently has a 0.7% dividend yield and even though it's not much, this is a great stock to own for the long term.
Even if they are some of the most stable companies, holding individual stocks still carries some amount of risk. Those who want to lower their risk factor more could turn to ETFs and Bonds.
ETFs
Again I have done a detailed video on what ETFs are. You can check it out here. When it comes to ETFs, you have similar options as in stocks. But the terminology is slightly different, So dividend stock becomes distributing ETFs and growth stocks accumulating ETFs. If you want to generate regular income from your portfolio, go for distributing ETFs. If you want to maximize future returns, go for accumulating ETFs since the profits are automatically reinvested back into the fund at no extra cost.
If you ask me for one investment, just one investment to hold forever, I would say go for the S&P500 ETF. If you want to have zero complications, very little maintenance effort, and still stay invested, just invest in this. The S&P 500 has been growing at an average rate of 7.5% in the last 20 years and is 99% sure that it will grow further in the long term. When you buy one unit of this ETF, you automatically diversify your portfolio across different sectors in the U.S. economy. Sure, there will be short-term fluctuations. But if you can handle that, then this is a sure easy shot at growing your money.
Most major stockbrokers have their version of the S&P 500 ETF but just don't bother too much. Opt for the one that you have access to. If you want to dive a bit deeper into ETFs, expand your portfolio by investing in an emerging market ETF that will give you a share of the emerging markets. Or a global ETF such as iShares MSCI World ETF that invests in stocks with a focus World. You can also find ETFs related to any specific industry.
If you think the aviation sector is making a comeback after the pandemic, and you want to invest. But don't know which company specifically will make profits, invest in an ETF that gives you broad exposure to the whole market as such. But as I said earlier, if you invest in a global ETF or S&P 500, you are good to go.
Bonds
Finally, the option with the least risk is the one that lets you sleep peacefully at night. Bonds. You may all have gone to a bank to take credit. Bonds are just like that, but in this case, you are the bank. And you are giving money to governments and companies. The only thing you have to check here is the person who takes the loan can pay it back with interest. That's why U.S. Treasury bonds are in such high demand. These are the bonds issued by the U.S. government, and they have never defaulted on its debt.
It is an almost zero-risk investment. Bonds pay you a fixed rate of interest, which can provide a steady income stream. You can buy U.S. treasury bonds directly from the website without a middleman.
You can also purchase Municipal bonds issued by state and local governments though are not quite as rock solid as treasury bonds. You could also buy bonds from corporates, which tend to offer higher interest rates. However, companies are more likely to default than governments and carry more risk. Always check for the credit rating before you go and make a purchase. A better credit rating means a better chance of getting your money back. A bond with a longer maturity period will pay a higher interest rate than a shorter-term bond. Bonds are an excellent way to stabilize your portfolio and protect yourself from market volatility.
An easy way to consistently invest in Stock or ETFs is through a Savings Plan on Scalable Capital. This video is not sponsored by them, Scalable capital offers a simple beginner-friendly platform that can make your investment journey easier. You can use the link in the description below to open an account directly.
If you want to know how much money to invest in each option, just check this where I discuss how to create a balanced portfolio based on your personal risk level. It's not necessary to find that killer stock that is going to the moon, the important thing is to start, get a feel of how the whole thing works, make mistakes, and learn from them. Relax and Enjoy the ride.
Disclaimer: The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. It is important to do your own analysis before making any investment.
