The basic goal of if investing is to make money! To make money, an investor must choose stocks that will increase in value instead of decrease. An investor must be able to pick companies that have moneymaking potential. Picking any stock is easy, picking stocks that will make money is difficult.
Why should I invest you may ask? Investing in the stock market is a good way to make money. Investing may or may not give you a higher return than your bank account. There is the risk of losing all your investment. Investing is also a good way to learn about how stocks, bonds and mutual funds work as well as learn about how corporations work.
When picking stocks the most important thing to remember is research! Research is the key to picking a good stock. One way of doing research is to go to the local mall. When walking around the mall watch the shoppers, where they go and what they buy. By walking around the mall, an investor will be able to see what companies and products are "hot" and what companies are not. After visiting the mall, check and see if the companies in the mall are public* or private*. If the company is public, do research, use the internet, newspapers and magazines, to find information about the company. It is also a good idea to call the company and see if they will send you an investors package. If the company is private, you're out of luck. Privately owned companies don't offer shares on the stock exchange.
Now that the research is done and you have decided on a stock(s), it's time to invest. To invest in the stock exchange you must go through a broker. There are many brokerage firms for you to choose from or you can invest through any bank. Many banks now offer investing services. All brokers take what is called "commission" when you invest. Commission is a fee charged by the broker for his/her services; the range depends on the broker. It is advisable for you to meet with a broker to find out the details on commissions. He or she may also give you more information on the company(s) you plan to invest in.
If everything goes all right you should now have stocks in a company, meaning that you own a certain percentage of that company. Now you can sit back and watch you stock(s) either rise or fall. Hopefully the stocks will rise in price. If the stock rises in price you can sell the stock and make a profit. To sell your stocks simply call your broker and ask them to sell your shares in the company you chose. It is a good idea to chart the progress of your stocks. To do this consult your local newspaper or now many investment Internet sites offer tracking for your portfolio*.
That is the basics of investing in stocks, but you can also invest in mutual funds. Mutual funds are a form of stocks, where a bunch of people pool their money together to invest in a bunch of different companies. Investing in mutual funds is similar to investing in stocks but the risk is much lower, making the gain lower also.
Investing is not for every person. If you have some money lying around in the bank, collecting little to no interest, you should consider investing in either stocks or mutual funds. The startup cost for investing can range greatly, depending on the price of the stock and the minimum number of shares that have to be bought called "lots". Some companies sell in small lots of 10 shares, while other companies have huge lots of 1000 to 10000 shares. Consult your broker to find out the lot size of a company and the current price to find out how much it will cost to buy the shares.
Click on the button for the continuation of this article on how to read stock charts, for help with tracking your stocks using the newspaper.
