“What is stock ?”
- Do you ever wonder what it feels like in investing your excess cash or savings to the stock market?
- Have you ever tried to become a shareholder of a company, well-known or not?
- Did you tried to browse what it would be like when you invested or purchased stocks in a stock market?
- Do you even know what the basics of stocks are?
Well, this would probably help you as a guide in your Basic’s journey in the stock market.
A stock market is a place where shares of companies that are listed for public trading are traded. A share is an ownership of the company/business. A company lists its shares on the stock market to raise money for its future investment needs.
The Largest Stock Exchanges In The World By Market Capitalization :
New York Stock Exchange – United States, NASDAQ – United States, Tokyo Stock Exchange – Japan, Shanghai Stock Exchange – China, Hong Kong Stock Exchange – Hong Kong, Euronext – Eurozone, London Stock Exchange -United Kingdom, Shenzhen Stock Exchange – China, Toronto Stock Exchange, – Canada, Bombay Stock Exchange – India.
How much money do you need to invest in stocks?
Despite the common misconception, you don’t need a ton of money to get started investing in stocks. Stock trading commissions have dropped significantly in recent years, so it’s practical to buy your first individual stock with just a few hundred dollars.
Many brokers also offer a nice selection of exchange traded funds commission free, so you can literally get started for the cost of just one share of whatever fund you’ve got your eye on.
Decide how to invest in stocks
There are several ways to approach stock investing. Choose the option that best represents how you want to invest, and how hands-on you would like to be in picking and choosing the stocks you invest in.
Opening your brokerage account
To invest in stocks, you need an investment account. For the hands-on types, this usually means a brokerage account. A brokerage account is similar to a bank account, with the key difference of being able to buy stocks, bonds, mutual funds, and ETFs. There are several great online-based brokerages with lots of features to help you analyze stocks, reasonable commission structures, and user-friendly trading platforms.
Traditional Brokers and Online Brokers : The online brokers compete with the traditional brokers. The online brokers offer lower costs, increased speed and a better guarantee of transparency and anonymity.
Traditional brokers are those who assign a licensed salesman to handle your account and take your orders via written instruction or through a phone call. Online brokers, on the other hand, are those whose main interface with their customer is through the Internet to Buy and sell stocks using your brokerage account.
Difference between stocks and stock mutual funds
Stock mutual funds or exchange-traded funds: These mutual funds let you purchase small pieces of many different stocks in a single transaction. Individual stocks: If you’re after a specific company, you can buy a single share or a few shares as a way to dip your toe into the stock-trading waters. Building a diversified portfolio out of many individual stocks is possible, but it takes a significant investment.
ADVANTAGES OF INVESTING IN STOCKS
Investment Gains: One of the primary benefits of investing in the stock market is the chance to grow your money.
Stock ownership takes advantage of a growing economy: As the economy grows, so do corporate earnings. That’s because economic growth creates income.
Safe In Inflation : They are the best way to stay ahead of inflation. Historically, stocks have averaged an annual return of 10 percent.
Easy to buy : The stock market makes it easy to buy shares of companies. You can purchase them through a broker, a financial planner, or online.
Make money in two ways: Most investors intend to buy low and then sell high. They invest in fast-growing companies that appreciate in value.
Easy to sell : The stock market allows you to sell your stock at any time.
DISADVANTAGES OF INVESTING IN STOCKS
Lose your entire investment : If a company does poorly, investors will sell, sending the stock price plummeting. When you sell, you will lose your initial investment.
Stockholders are paid last if the company goes broke : Preferred stockholders and bondholders get paid first.
Research lot of time : You’ve got to research each and every company to determine how profitable you think it will be before you buy stock. You’ve got to learn how to read financial statements and annual reports, and follow your company’s developments in the news.
Emotional roller coaster : Stock prices rise and fall every second. Individuals have the tendency to buy high, out of greed, and sell low, out of fear.
Compete against professionals : Institutional investors and traders have more time and knowledge to invest. Find out how to gain an advantage as an individual investor.