The Beginners Guide to Investing in Stock

Today, most Americans invest in the stock market as way to grow and increase their savings and retirement. More than 50% of all Americans have money invested in stocks, bonds, or mutual funds. Over the last few years, the stock market has outperformed all other investment opportunities. The beginners guide to investing in stock outlines the basic principles of investment.

• A stock is a share in the ownership of the company and represents the investors claim on potential earnings and assets. As investors purchase more stock, their stake in the company, and the potential for higher earnings, grow.
• Profits are often paid out as dividends, and the more stock owned, the more dividends reaped.
• Many investors purchase stock as part of a long-term wealth management strategy. Other investors are focused on short term gains.
• Beginning stock investors know to "buy low" and "sell high", but more sophisticated investors have a strategy that will help them ride out the market volatility for long term wealth.
• Stock prices fluctuate throughout the day. This is a result of supply and demand as practiced by the free market economy. Share prices changes because both the demand and supply of those shares change. If more people want to buy a company's stock, the price goes up. If more people are selling the stock, the stock price falls. The price of a stock is reflective of what the market feels the company is worth. Investors and analysts watch the stock's movement and try to predict the best times to buy and sell the shares.

Beginning investors should study a company's earnings before investing. The earnings are the profit a company makes. Companies traded on Wall Street (via a stock exchange) are required to report their earnings quarterly to the Securities and Exchange Commission (SEC). If a company is making more money than expected, you can count on the stock price to increase. Subsequently, if the company made less money than projected, the stock price will drop.

Many investors buy stock using a brokerage firm. Full service brokerage firms offer advice and manage investor's portfolio. They charge higher fees than discount and online brokerage firms. Discount firms do not provide advice, research or personalized customer service. Online brokerage sites allow anyone with a bank account and some money to invest in the stock market. There are a number of reputable on-line sites that can help investors research the earnings history and potential of any company The financial media, whether online or on television can also provide expert advice and analysis about the stock market.

The main points of this beginning guide to investing in stocks are simple. Buy stocks when the prices are low. Determine if your investment strategy is designed for long-term growth or short-term capital gains. Identify when you feel you should cut your losses and when you feel you can ride the volatility of the market. Stay informed about your portfolio and make decisions accordingly. Beginning stock investors should stay calm and continue to invest where they feel comfortable.

What Are Shares? A Beginner's Guide To Company Shares On The Stock Market

Most people know that shares are something that you can buy and trade on a stock market without really knowing what shares are.

This article provides a beginner's guide to company shares on the stock market, explains what shares are and where shares come from.

Owning A Business

There are many business owners in the world today.

You may even be one of them yourself, especially if you have a small business?

Maybe you own a retail shop, a freelance consultancy company, or an e-bay company for example?

You may even be a successful entrepreneur owning a large business worth millions?

Okay, possible but unlikely.

The point is that although companies exist in many shapes and sizes, they are usually sizable financial assets worth thousands or hundreds of thousands, if not millions or billions, even.

Hence, the chance of owning one yourself is beyond the reach of most people.

Smaller Pieces

But let's just hypothesize for a moment.

What if you are a successful entrepreneur and have built a large business worth millions, what do you do when you want to release some of the funds from your business without selling the entire business?

Or, how do you allow an investor to add more funds to your business in return for a percentage of the ownership? One of the most common ways of doing this is to create shares.

A share is a piece of a financial asset, in this case, a piece of a company. When creating the company shares, it is possible to create as many shares as you wish.

Raising Funds With Shares

So if you are an entrepreneur with a company worth £1 million, you could decide to sell only 10% of your company by creating 100,000 shares valued at £1 each (making up £100,000 or 10% of £1 million).

The shares don't have to be valued at £1 each of course. They could be anything as long as the number of shares multiplied by their value equals the £100,000. So 50,000 shares of £2 each or 200,000 shares of £0.50 each are equally valid.

In our example, having created our 100,000 shares of £1 each, they could all be sold to a single investor or shared between a number of investors.

In this way, the entrepreneur attracts new funds into their business and/or sells off part of their ownership.

Investing In Shares

If you are an investor, rather than the entrepreneur, then you can invest in a number of businesses by buying shares in them. If you own one or more of the shares of a company, you own a piece or several pieces of the company. Buying shares of a company therefore makes you a partial owner of the company!