Tuesday, January 30, 2018

A Beginner’s Guide To The Stock Market

The world of stock market may come off as confusing and complicated to some especially for millennials but to others, it’s very helpful, efficient and interesting. Stock market is basically an aggregation of buyers and sellers of stocks which fully represent ownership claims on businesses as per Wikipedia. It has helped a lot of people all around the globe. You may wonder why you’re still putting your money on your safe when you could buy funds that can help your money grow faster through the stock market. If you want to have a grasp of the stock market, continue reading below:

1. What to buy?
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What to buy on your first involvement in the stock market? It’s just as simple as this. Experts are saying that in order to prevent risks, one should go for funds over shares in a company because it is still better to expose yourself in stock market with different group of companies through a unit trust fund or an open-ended investment company.

One thing that you have to take note about this is the fact that whatever your first investment is, you should your own individual savings account.

2. Types of stocks
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In our generation today, there are already a lot of types of stocks but the most common ones are listed below. To know more, keep reading:

A. Common Stock
So what is a common stock? As per Investopedia, Common shares represent a claim on profits (dividends) and confer voting rights. Investors most often get one vote per share-owned to elect board members who oversee the major decisions made by management. Over the long term, common stock, by means of capital growth, has tended to yield higher returns than corporate bonds. This higher return comes at a cost, however, since common stocks entail the most risk including the potential to lose the entire amount invested if a company goes out of business. If a company goes bankrupt and liquidated, the common shareholders will not receive money until the creditors, bondholders and preferred shareholders are paid.

B. Preferred Stock
Also from Investopedia, preferred stock functions similarly to bonds, and usually doesn't come with the voting rights (this may vary depending on the company, but in many cases preferred shareholders do not have any voting rights). With preferred shares, investors are usually guaranteed a fixed dividend in perpetuity. This is different from common stock which has variable dividends that are declared by the board of directors and never guaranteed. In fact, many companies do not pay out dividends to common stock at all.

3. Start Betting
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If in case you have thousands of cash to invest then why not try investing them in three different funds namely low, medium and high risk funds so that the growth of your money will be consistent. You just have to make sure that the funds are trustable and that it is really something that you want because it can also be risky at times.

4. The Stock Broker
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A stock broker plays a big role in the world of stock market. A lot of experts have said that the best way to start investing is by opening a brokerage account with a trusted and well-respected stock broker. You have to know the history of the broker in order for you to not be scammed.

5. Conclusion
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The first few months of investing in stocks may be rough but everything will surely be smooth as the years go by if you are consistent with the needed transactions. Always remember that the two main types of stocks are common and preferred and to buy stocks, you can go for a dividend reinvestment plan or brokerage.

Author Bio: Mark Aldrin Hipolito is a daytime writer at FP Markets, one of the most successful and established forex providers in the world. He writes to help people get interested in the world of trade markets.


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