Even just the thought of stocks investment can be intimidating enough for the average person. This article strives to provide a brief introduction to it.
A stock is another term for equities or shares of ownership in a company. If one wants to have a stake in a particular company, he can if there are stocks for sale for that particular company. When stocks are bought, the buyer will now be a shareholder of the company.
Because an investor can buy stock, he can also sell them. If he buys a stock at $5 a share, and its price rises, say to $7, then he may sell it at that amount to have a profit of $2 a share. On the other hand, if the price drops from $5 to $3, and he is forced to sell at that price, then he stands to lose $2 a share.
As a shareholder, he can receive dividends, i.e., money that is proportional to the share he has in the company. This is of course assuming that the company is doing well. If the company is in trouble, then the investor’s money is in trouble as well. In this case, the price of stock could plummet.
If one divests at this point, he will do so at a loss. If he stays on, he can still have a chance of recovering if the company is somehow also able to recover. If not, and the company goes bankrupt, then the investor will also lose his stocks investment.
If the thought of losing everything to stocks investment doesn’t worry you enough, or if the thought of reaping dividends is enough to entice you, then read on.
So how does one get started in stocks investment?
Probably the first thing you’d like to know is where in the world stocks are bought and sold. Stocks are bought and sold either in the OTCBB, Pink Sheets, or in any of the securitized stock exchanges (NASDAQ or NYSE).
One doesn’t have to personally buy or sell stocks. Stock brokers can do this for an interested investor. They are professionals who dedicated their time studying stocks of various companies, and hence are well informed as to which stocks can make a good profit.
There are also online brokerage systems that allow stocks investment to be done online, in the comfort of your home or wherever there is an internet connection. These online systems allow you to rank the best performing or worst performing stocks in a day, week, month, or year.
These systems can also display a graph representing the fluctuation of the price of a particular stock for a specified period. This information can give you a better idea of the stocks to look out for and the ones to avoid.
Whether stocks investment are done through a stock broker or through an online system, it always pays to study the market yourself. If a certain stock catches your fancy, it is always advisable to scout on the company to determine whether you would be making a sound stock investment or whether you are simply putting your money at risk.