Ask a Fool: What Is the Best Stock for New Investors?
Q: I'm new to investing. What's a good stock to buy first?
Congratulations! Making the decision to start investing is one of the smartest financial moves you will ever make.
When you're just starting out, you should aim to create a diverse portfolio of rock-solid companies. This should be priority No. 1 before you decide to take your chances on any high-growth or otherwise speculative investments.
My absolute favorite stock for new investors is Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B), the conglomerate led by Warren Buffett. Berkshire has a phenomenal track record of producing consistent returns for shareholders, and has grown its book value in 48 of the past 50 years.
The primary reason I love Berkshire for first-timers is that it's like buying a diverse stock portfolio in a single investment. Berkshire owns about 60 subsidiary businesses, including household names such as Geico, Fruit of the Loom, Dairy Queen, and The Pampered Chef. In other words, Berkshire's revenue isn't too dependent on any one industry.
In addition, Berkshire owns a diverse portfolio that holds 45 excellent investments, and is managed by Buffett and his two stock-picking lieutenants, Todd Combs and Ted Weschler. By investing in Berkshire Hathaway, you're also buying a piece of Apple, Coca-Cola, Wells Fargo, American Express, Kraft Heinz, and many others.
When you're just starting to invest in stocks, it's often not practical to invest in enough companies to properly diversify your portfolio. And while no stock should be your only investment, Berkshire Hathaway is about the closest thing to a stand-alone stock you can find.
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Offer from The Motley Fool: The 10 best stocks to buy nowMotley Fool co-founders Tom and David Gardner have spent more than a decade beating the market. In fact, the newsletter they run, Motley Fool Stock Advisor, has tripled the S&P 500!*
Tom and David just revealed their ten top stock picks for investors to buy right now.
Click here to get access to the full list!
*Stock Advisor returns as of 5/1/2017.
Matthew Frankel owns shares of AXP, AAPL, and Berkshire Hathaway (B shares). The Motley Fool owns shares of and recommends AAPL and Berkshire Hathaway (B shares). The Motley Fool recommends AXP. The Motley Fool has a disclosure policy.