There is a good and reliable way to build wealth, it is an old system that still works, it is called the stock market. The stock market has been around for a long time, and many fortunes have been make there. So how do you get a piece of this action?
Before you venture off and invest even one penny of your hard earned money you will need to learn some basics. It is always a good idea to take a course and learn a method of investment before you start. If you just go in and guess at what looks good you will simply lose your money. Now if you have lots of money to just throw away then you do not need the information in this article.
Before You Invest
With all the new and modern technologies available in the financial markets it is seemingly easier to sell and buy stocks. While this is true, the easier part is that it is faster and you do not have to have a broker. However, you must still buy and sell the correct stocks at the right time to make money. This is where and education in the stock market comes in very handy.
Buying and Selling Stocks
The buying and selling of stocks is called trading. The term “trades,” is a Wall Street term that means conducting business to buy, and sell stock. Stock is the paper issued by a company that needed to raise capital to conduct business, and a stock is a piece of that company called a share. This is why buying a stock is called investing, as you are loaning your money to a company so that they can conduct business, and you expect something in return.
Most stock pays a dividend. This is where the company divides it profits by the number of shares and pays it to the holder of the stock. This may happen monthly, quarterly, and sometimes annually. If the company did not make a profit then it does not pay a dividend. When the company pays good dividends, the cost or value of the stock goes up with the promise of more future earnings. Of course, when the company does not pay dividends then the value of the stock goes down, as less people are willing to buy stock that will not provide any future earnings.
That is the simple basics of stock investing, and the how and why stocks are worth money. The trick to successful investing is to know what stocks will do well, that is an increase in value, and which stocks are going to go down, which is a decrease in value. This is where a system comes into play, if you do not have a system; you will only lose your money, you might just as well “invest” in lottery tickets.
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