Investing in stocks can be a great source of income. You must, however, utilize intelligent investment strategies. This article will give you some great advice so you can earn a solid profit from your investments.

Check out your potential investment broker’s reputation before giving him or her any money. Investment fraud is such a disastrous possibility that spending a little time verifying your broker’s legitimacy is well worth it.

Diversify your investments. You shouldn’t put your eggs all in one basket. For example, if you’ve only invested in one stock and it fails, you’ll lose everything.

One account you should have, is a high bearing account containing at least six months’ salary. By doing this you will save yourself from financial disaster if you are faced with a job loss or medical emergency.

Do not put over 5 or 10 percent of your investment capital into one stock. This way if the stock does go into rapid decline at a later date, the amount of risk that you have been exposed gets greatly reduced.

Regard your stocks as if you own a piece of a company. Dedicate the time necessary to understand financial statements and assess the pros and cons of companies you may decide to purchase. This will give you the opportunity to decide whether or not you should own particular stocks.

Look for stock investments that can return higher profits than 10%, as this is what the market has averaged over the last 20 years, and index funds can give you this return. If you’d like to estimate your return from a stock, find the earnings growth rate that’s projected and add that to the dividend yield. A stock whose earnings are growing at 12% that also yields 2% in dividends offers you a potential return of 14%, for example.

Timing the markets is not a good idea. Research shows that patience pays off and slow and steady is the tried and true method for success in the world of stock. Just figure out how much of your income is wise to invest. Put this amount into the stock market and continue to do so regularly.

If you value the assistance of a broker, but want the option of also trading on your own, look for a broker that can offer you both online and full-service options. This way you can just dedicate half to a professional and just handle the rest of your investments on your own. This will give you professional assistance without giving up total control of your investments.

Stock market investing can be rewarding financially, but it also carries some risk. It is important to be prepared. Once you have the hang of things, you may be quite surprised to learn how much money you can actually earn trading stocks. Apply the advice you have learned here today to give you an advantage in any market situation.