Knowledge Is Power: A Research On Stock Market Investment
A stock, a.k.a. share or equity, represents one's ownership of a
company. For example, a person who has 100 shares of company A,
out of its total of 1000 shares, means he owns 10% of the
company. As part owner of a company, the shareholder earns, when
the company makes profit. In the same way, if the company loses,
so does the shareholder.
A stock market is a place (real or virtual) to trade (buy and
sell) one's stocks. The New York Stock Exchange (NYSE,
http://www.nyse.com/home.html) and the NASDAQ
(http://www.nasdaq.com/) are examples of real and virtual stock
markets, respectively.
That's a brief overview. For a more comprehensive understanding,
go to http://www.investopedia.com. For the stock market
investment newbie, try to play a virtual game at
http://investsmart.coe.uga.edu/C001759/usmarket/usmarket.htm,
without spending dime. Students can practice stock market
investment at www.smgww.org. and www.stocksquest.com.
Then why invest in stocks? Because it earns 10% - 12%. This is
higher than any other type of investment (savings account, bonds
and the like). The way to earn is to sell your stock market
investment at a higher price than when you bought it; the price
difference is your profit. You can earn in 3 ways:
1. Buying stocks at IPO (Initial Public Offering). When
companies decide to sell stocks, they will offer it at an
initial price. After some time, with the company's good
performance, the initial price increases, thus the earning;
2. Dividend. As a reward for investing in their company, the
company may choose to give a portion of its earnings to its
investors through dividends per share. However, this not a
requirement for stock market investment, but purely voluntary;
3. Trading stocks. If you intend to invest in Company A, but did
not catch its IPO, you can still do so by buying at the stock
market. A broker, in your behalf, will bid for the best-priced
stock of Company A, according to the price you want. The same
happens, when selling. Compare and find the best broker at
http://www.fool.com/dbc/tables/compare.htm?ref=60broker.
The key to success stock market investment is to know everything
there is to know, about the company and the factors affect its
performance. Consult the following:
The official website of the company. This should show the
company's corporate set-up, financial health and organizational
structure as well as historical data of their stock performance.
Investment websites such as Yahoo!Finance, MSN Central and
DowJone's MarketWatch;
The news. To be aware of all the factors that may affect your
investment, be updated with the news. For all you know, the
weather forecast is the ace up your sleeve.
Knowledge is power and so it is in stock market investment.
Invest successfully, with the power of knowledge!