Understanding Stock Market Investing
Many people want to put their money to work. Stock market investing is one of the primary ways to put aside money and see it grow over time. Stocks are probably one of the greatest tools available today for building wealth. However, when interested in this area, it’s important to understand stocks and how they are traded.
Stock Basics:
To get started, a stock is a share in the ownership of a company. Stock represents a claim on a company’s earnings and assets. A person who owns more stocks has a greater stake in the ownership of the company. Stocks may also be referred to as shares or equity, but these words all mean the same thing.
In their early days, stocks actually had certificates that owners would have. However, in today’s digital age, the records are electronic which makes them easier to trade. In the past, when a person wanted to sell their shares, they had to physically take certificates to a brokerage. However, trading can be done online or by a simple phone call. As companies gain market ground or increase their profits, their stocks will go up in value. While the owner of the stock does not receive any money from the company itself, that person will be able to sell the stock for a higher amount of money over time. Investing in a solid company usually means a steady increase in value over time.
However, if a company loses value or is liquidated, the stock will be worth either nothing or less than the buyer paid for the shares. For this reason, it’s important to create a diversity of investments and to purchase stocks in companies that are reliable.
Purchasing Stock:
There are two primary ways to purchase stock. The most common method is using a brokerage. A full service brokerage is designed to offer expert advice and manage the account. However, they often charge a significant amount of money for these services. A discount brokerage does not offer much personal attention, but is a less expensive option. Today, there are brokerage offices as well as online brokers.
The second method is known as either a dividend reinvestment plan or a direct investment plan. This is a plan where individual companies allow shareholders to purchase shares directly from the company. These options are great ways to invest a small amount of money at a regular interval. However, with this method, as all others, buyers should do their research before making any purchases.
Getting Started:
Investing in the stock market offers a significant return on investments when it’s done well. However, since many people don’t understand the finer points of stocks, find a credible source to learn more. One of the best sources to use is http://warrensulmasy.com. Warren Sulmasy has several decades of experience in the financial markets and offers a great place for beginners to start. His website features articles on investing and covers a wide range of topics. When interested in getting started, this article can provide some initial insight, but more information will be needed. Use this expert source to learn the finer points of investing in stocks.
