How to Invest in Stock Market?
- Here you'll find a general overview based on commonly asked
questions. What is the stock market? The early New York Stock Exchange
started as a group of men trading beneath the shade of a buttonwood tree
in New York City.
How to Invest in Stock Market? - This bears
little resemblance to today's computerised global markets but the
principles remain the same. Stock represents ownership of a piece of
corporation. You can choose to buy a piece of a corporation for many
reasons and equally you may choose to sell your piece. This buying and
selling of stock takes place in the stock markets where buyers and
sellers come to make these exchanges in return for money. In a free
market, the price a buyer is willing to pay or a seller is willing to
accept is entirely discretionary.
You can set your price and
cannot be forced to buy or sell at any other price. What are the
benefits of owning stock? The main reason for investing in stock is for
your money to grow in value over time relative to inflation.
Historically stocks have proved to be more profitable than bonds or
other instruments but this must be taken in context with time. During
any short period stocks have the potential to lag other investments but
over the long haul history shows there is no better place for
individuals to invest than in the stock markets. Dividends on individual
stocks are also a benefit. Consider them just that - a benefit but not
the main return. Your main reason to invest in stock is for your capital
to grow and so choosing a stock on the basis of potential dividend may
actually lead to a significant loss of capital if the stock price
declines.
Who makes money? In terms of the trading values,
theoretically professional traders ought to be making money but the sad
fact behind the statistics is that the majority of professional traders
and fund managers do not make decent returns for their investors. This
is why more people are choosing to handle their own investments but if
the professionals can't do it what hope do you as an individual have?
Much! There are restrictions upon professional traders and difficulties
associated with trading huge accounts which do not apply to individual
investors. The effects of these can make massive differences in returns.
As you learn more you'll understand that you are in the best position
to take responsibility for trading your own personal capital and will
undoubtedly reap far greater returns than leaving it to others. Is it
easy?! The $1,000,000 question! Is driving a car easy? Sure - when you
know how!
But if you had 20 different people telling a beginner
how to do it and each with a different opinion it could prove difficult
and dangerous. In fact many may even give up before mastering the
controls. So goes it with trading. You want to avoid jumping from
strategy to strategy. Trial and error on several get rich quick schemes
can soon leave your pockets lighter. The markets have been around for
more than 200 years and operate on the same emotions now as then.
Instead of trying to beat them quickly into giving you money, learn how
they operate and what repeatedly drives successful stocks to the top.
Take
the time necessary to truly learn how to reliably, safely and
sustainably make money in the stock market. That's the key to true
financial freedom. It doesn't need to take years but it does require
careful study and application. Hope you found it informative reading
this over view of how to make money in the stock market. To read the
next article in this Learning the Stock Market series simply search for
Bill Benson or USA Stock Market.
