Thinking of and finding companies to invest in can be difficult. That’s why I wanted to share with you the best way to find great companies that you can invest in right now.
It doesn’t require diligent research. It doesn’t require vast investment knowledge. And, it doesn’t require any special skills. All it requires is a little awareness of what you do every day.
What’s the trick?
Invest in Companies You Are a Customer Of!
Think about it. What products or services do you buy on a regular basis? Why do you buy those products? Are you a regular user of them? Are you addicted to them?
Chances are that there are going to be great companies behind these great products.
Just think about what you spend your money on.
Do you buy diapers, cleaning supplies, bath tissue, or toothbrushes? Everybody does, and they do it regularly. That is what makes these companies great:
- The Clorox Company (CLX): The maker of the most popular bleach, but also a myriad of other housewares and accessory items.
- Kimberly-Clark Corporation (KMB): The maker of most paper products for the home, such as toilet tissue and paper towels, as well as other personal products.
- Procter & Gamble (PG): A large conglomerate of personal care products make up this company’s portfolio.
- Johnson & Johnson (JNJ): The most well-known maker of baby-care products, as well as over-the-counter pharmaceuticals.
Everyone likes to eat, drink, and be merry — especially during this time of the year. As a result, most people are familiar with these popular food and beverage companies, or at least their products:
- The Coca-Cola Company (KO): One of the most famous corporations in the world, the maker of Coca-Cola and hundreds of other beverages has been a great company to invest in for many years.
- PepsiCo, Inc. (PEP): The largest competitor to Coca-Cola, Pepsi has also been growing, but in slightly different sectors than Coke.
- Hansen Natural Corporation (HANS): The maker of more alternative and natural beverages, this company has delivered solid profitability for several years.
- Diageo plc (DEO): Most adults enjoy spirits every now and then, and this maker of distilled beverages is behind most of the brands you know and love.
This was just a small sample. There are many more types of companies that you know and use — like insurance companies, utilities, banks, shops, and more.
The Most Profitable Companies in the World
When looking for great companies, just look at this list of the most profitable companies in the world:
- Chevron Corporation
- Microsoft Corporation
- J.P. Morgan Chase & Co.
- Walmart Inc.
- Apple Inc.
- Johnson & Johnson
- Berkshire Hathaway
What do all these companies have in common? They have great products that consumers know, love, or have to use (like insurance and gasoline).
Don’t Reinvent the Wheel
When it comes to investing, don’t reinvent the wheel. That is how you get burned.
Speculative stocks and high flyers can be fun to watch, but they are probably not great long-term investments.
The best long-term investments are ones that are tried and true, have proven products that you know and use, and they trap customers into staying — either via loyalty or monopoly.
Just look at the list above . . . I’m sure you recognize every company on it — not just for their name, but also for the product they sell.
Which companies do you use and invest in?
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.