Investing in stock is one of most important investment as have offered the potential for growth. From the history stock investment is proven to be the most profitable and easiest way to invest money. Also, in Forbes list of the wealthiest people almost everyone owns a large block of shares so by this you can see how investing in stock is a great deal.
What are stocks?
Stock shares is one way that companies raise capital to finance its operation, and in return, you earn dividends (profit). I will discuss more about share stock below so, continue reading this post to get knowledge about stocks.
How does investing in stocks work?
To understand how investing in stock work you need to know “how stock works.” So how do stock works?
Just imagine you want to start a business with your friends. To start this business, you need $ 100 000 capital (finance). To raise $100 000 you can issue share.
How do you issue stock share?
Well, you can divide the company (Business) into 1000 shares then you price each share at $100. Anyone who buys company share is a shareholder. By selling all the company shares, you will be able to raise the amount needed.
Yes, by selling 1000 share x $ 100 price per share = $100 000.
Now you understand how a company raises capital by issuing stock shares so, let us see how investing in stock works.
Using the example above where a company has 1000 shares you can buy (invest) let say 80 shares. Since one share cost $100, you will pay (invest) $8000.
Yes, $8000 = 80 shares x $100 price per share
Buying 80 shares, you help the company to raise capital by giving out your $ 8000.
But how do you benefit from that, by allowing a company to use your $8000?
In return, you will be earning dividends. A dividend is the amount of money regularly paid by the company to its shareholders out of its profit.
So, by buying company share, you invest your money, and in return, you will earn divided regularly depending on the terms of the company.
How to invest in stocks
Like other investments, when investing in stock, you need to consider many factors .Some of those factors are as follows:
- Decide whether you want to do yourself or choose someone to manage the whole process
- Know the business that company do before investing your money.
- Diversify your portfolio –“Don’t put all your eggs in one basket “
- Do proper research before buying shares
- Search the earning history of the company before buying shares- This will help to understand the risk of losing your money
- Search the company leaders and management
- Always take time to consult to avoid fraud
How to buy stocks
- The first method is to buy by yourself-By buying stock by yourself you don’t need any broker or agency
- You can use a stockbroker –A broker is a professional person or a firm that is regulated to deal with buying and selling of shares on behalf of their clients. Stockbrokers charge certain percentage as a commission so when choosing a broker you need to know how much they charge as well as their terms and conditions.
Now you want to buy stocks right? Well, to buy stock you can use two methods
If you choose stockbroker also, you need to decide whether you need to use online stock brokers or Get a broker in person.
If you choose online brokerage you must know the process on how to invest in stock online.
How to invest in stocks online?
To invest in stock online is very simple. After considering the above factors here are the steps to follow;
- Open account
First thing to do to start investing in stock online is to open an online brokerage account. Opening brokerage is very simple as a bank account. All you need to do is application and verification, and then you’re ready to go.
- Select stock
Once you have a brokerage account, the second thing you need to do is select your stock. Remember when choosing stock shares you need to do proper research of the company.
- Set your Budget
After selecting different share stock, you know the amount of share you need to buy on each company
- Master Investing in the Stock Market with Stocks, Mutual Funds, ETF, from a Top Instructor & Millionaire Stock Portfolio
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