Have you ever thought about investing in the stock market? Yet you do not have any information on where to get started. What do you need to know before you start investing in the stock market? This week we begin a short series about learning the basics of investing in stocks.
What are stocks? A company’s stock is the shares in the company that are issued (sold) to investors in an initial public offering (IPO). The shareholder then becomes a part owner of the company.
Stocks (or shares) are bought and sold through stock exchanges, such as the New York Stock Exchange.
There are different types of stocks, which we will discuss next week. Knowing the characteristics of different stocks will allow you to buy those stocks that fit best with your risk profile.
Investors normally buy and sell shares (or stocks) through stockbrokers who charge a fee called brokerage for the service.
When am I ready for stocks? There are several things to have in place before you invest in stocks including specific amount of disposable income to invest, minimal levels of debt, and savings plan in place. Money used for investing should be funds that you will not need to be available in near future.
Why stocks? Stock market investing is one form of investing. You need to be clear in your mind that stock investing offers the best alternative for your particular circumstances. Two great benefits to investing in stocks are you can start stock investing with as little as a thousand dollars and the stock market offers greater diversification.
In closing, start with stock investing which means value investing for the longer term (normally at least three years) in companies that you believe will perform well over time. Take the time to learn the language and understand the characteristics of different types of stock. This will enable you to choose the stock investing strategy that best suits your risk profile.
We look forward to continuing this investing series next week, as we learn about the different types of stocks.
Remember our goal is to get Financial F.I.T. (Focused, Involved to Transform your life).
Until next week,