Advantages of Stock Market Investing and How to Get Started
Stock market investing is not as complicated as what most people think of. People just need to let go of their traditional misconceptions so their minds will open up to the opportunities making your money grow by staying invested in stock on a long term basis. In fact stocks are best for your college saving portfolio.
Get started with stock market investing as early as you can have a first hand experience on the magic of compound interest.
Frequently Asked Questions
First off, we need to learn some basic concepts. We'll explain first, frequently asked questions relative to stock market investing.
What is a stock?
A stock represents a share or part ownership of a corporation.
What is a stock certificate?
A stock certificate represents ownership in a corporation. If you invest in a company, you will be issued a stock certificate as proof of being a shareholder or co-owner.
What is a stock market?
The stock market is the place where you can invest in other peoples’ publicly listed companies. Many big, stable companies go public to raise money to expand its business. A company sells shares of stock through an Initial Public Offering (IPO).
What does going public mean?
Going public simply means being listed on a stock exchange and issuing shares to investors or selling a certain portion of its total equity to the investing public. By paying for the shares, each investor buys part ownership of the company’s business and becomes a shareholder in the company.
Why invest in a company?
You invest into a company to participate in its growth through: a) Price Appreciation; and b) Dividends
What is capital appreciation?
Capital appreciation is the ability for a stocks’ price to increase in value as driven by business prospects
What are dividends?
Dividends represents some share of the company's profits which are distributed to shareholders. Dividends are distributed either through cash or added shares of the company.
What are the advantages of investing in the stock market?
- When you buy a company's stock you can participate in its growth through (a) Price Appreciation (b) Dividends
- Stock market investing is the best investing vehicle to get you immediately started even if you are still conceptualizing or brainstorming on business ideas;
- Investing in stocks yields the highest return over time, if you invest with a long term perspective.
- If you are directly investing in the stock market, you have control over the combination of companies you want to invest in. In effect, you can implement you own diversification strategies.
- Investing in stock is one of the best ways to create passive income.
Ways to Invest in Stocks
There are two routes to get access to the stock market. One is the direct way wherein you open an account yourself, choose yourself the company you like to invest with and buy the stock of that company through an stockbroker. Nowadays, direct stock investing is made much easier with the advent of the Internet. You can do it with an online stockbroker. Please visit another article which is a guide to stock market investing through online facility.
The other route to stock market investing is through indirect means. This is through mutual funds companies which charges fees for managing your investment. The mutual companies pool the funds from individual investors and chooses the companies on behalf of the investors. There are three basic types of mutual funds: equity fund, bond fund and balanced fund. Choose equity fund so your money gets invested in stocks. To learn more about mutual funds, visit mutual fund investing basics.