A beginner’s introduction to investing
One way companies can raise money to fund their business is by selling stock to the public. When people buy stock in a company, they are betting that the investment will grow over time, along with the company they are investing in.
As of May 2022, 58% of Americans own Gallup stock. One reason for this is the increased visibility and accessibility of the stock market thanks to a slew of trading apps like Robinhood, Acorns and more, which have driven trading costs to zero and claim to make trading easier for the average investor.
If you are new to investing or just curious about the market, we have the basic information you need.
How to buy shares
According to Forbes, the easiest way to get set up to buy stocks is to open a brokerage account. There are many different types of accounts that you can open.
If you’re saving for your retirement, it might be a good idea to open an Individual Retirement Arrangement (IRA), a type of account that offers you certain tax benefits while also allowing you to explore the types of actions you can take and limits the amount you can invest each year.
On the other hand, taxable brokerage accounts can give you more flexibility and access to your assets indefinitely, with the downside that any capital gains resulting from these transactions are subject to taxation in that tax year.
Once you’ve opened an account, you should do careful research before deciding which stocks to buy. There’s no one right way to invest, so your stock portfolio may look very different to others based on your individual financial goals and the type of business you’re interested in supporting.
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What is a share?
The words “stock”, “shares” and “equity” all mean the same thing. They relate to a shareholder’s entitlement to the assets of a company.
In other words, owning stock is owning a small part of a company. They even get voting rights on certain corporate actions that may require shareholder approval.
How do stocks work?
Companies sell stocks when they need access to more capital. Then, when demand for certain stocks increases, often due to a company’s success, the stock’s price can rise, making your original investment worth more.
There are many ways that experienced stock traders can determine exactly when to buy and sell stocks to their advantage. Simply put, you can generally expect your stocks to increase in value when the companies you invest in are doing well, and decrease in value when those companies are performing poorly.
Stock traders buy stocks with the intention of making a profit by selling them when they are worth more than their original purchase price.
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How to check stock prices
According to Forbes, one of the easiest ways to follow the broader market pulse is to review popular market indices, such as the Dow Jones Industrial Average and the S&P 500. These market indices, which track the performance of select groups of stocks, provide a window onto the overall health of the stock market.
To check the prices of certain publicly traded stocks, the New York Stock Exchange (NYSE) and Nasdaq stock exchanges have search facilities on their websites. Each publicly traded company is assigned a unique ticker or combination of letters or numbers to identify its stock. You can type in the ticker or you can usually find the company’s ticker using the search function.
Sites like MarketWatch also report on many popular indices and individual stocks across the United States, Asia, and Europe, as well as cryptocurrencies.