You will find stock investing very difficult and you likely won't make much money if you don't know the stock market basics. These basics are important to get the most out of your investment. If you aren't well educated, you won't have any idea what you are doing. Here are some stock market basics to get you started. To further help you learn about the markets, sign up for a free stock market game to get started in the markets risk free, below.
What is a Stock?
When referring to stock in an investing atmosphere, stock is actually broken up into shares. A company will decide to issue stock when they decide they need the money to fund their business. They will have the choice to issue bonds, which is basically borrowing money, or issue stock.
Shares of stock are not loans like bonds. It is equity. When you buy shares of stock in a company, you essentially own part of the company. You will pay a price for that stock based on the market. You can own shares of stock in all the companies you want as long as they are public companies and you have a brokerage account.
How do you Own a Stock?
Owning stock is simple. First, you need to set up an account with a brokerage firm. Then, you can place an order to buy stock. Stock is sold on many different stock exchanges, so you have to be sure that the brokerage firm you are working with will allow you to buy the specific stock you are looking to buy.
You no longer need to own the physical piece of paper stock as it used to be. Now you own it electronically. With an online account, you can easily check your investments as long as you have a computer with internet access.
Owning stocks gives you a few privileges. You are allowed to go to stockholders meetings and vote for board members. Most people don't go to these unless they low a large stake in a corporation. You can also get paid quarterly dividends from the corporation if they are issued.
How do you Make Money with Stocks
Other than getting dividends, you can make money from stock through capital gains. This is quite simple. When you sell a stock, if you sell it for more than you paid, the difference is what you earn. When you buy stock, your main motive is to see the value of it increase over time. This may be a couple days, a few months, or several years. It all depends on your strategy and how the stock is doing.
Other Resources for Stock Market Basics
This is far from all the stock market basics you need to know before you start investing. You can learn a lot by reading books and surfing the web. Another great way to learn even more is by real practice. Instead of risking your own money, you can start practicing for free with a free stock market simulation game. This allows you to get real experience without risking your own money just yet.