How to Get In the Stock Market Game 

Buying stocks can seem intimidating to anyone who has never attempted the endeavor. People often wonder how they can get in on the action of making a passive residual income with little to no effort. The allure of high returns on investment is a huge attraction for potential investors. What’s more advantageous is the compounding interest over an extended period of time. With technical words like stock split calendar, dividends, and compounding interest, it’s no wonder individuals are intimidated at the thought of buying stocks.  

There are numerous stories of individuals who have made fortunes in the stock market. Conversely, there have been nightmare stories of individuals who have lost their entire life’s savings as well. So how does an individual make the decision to choose an investment vehicle that is right for them? 

What are stocks? 

Stocks represent fractional ownership of a particular company. Back in the day, a simple phone call to a broker would get you as many shares of stocks as you desired. Nowadays, stocks are purchased mainly online through a brokerage company. When a company issues stock, they are attempting to raise money to grow the company’s business. For investors, it is a way to grow their investment over time. There are four types of stocks: 

  • Growth stocks 
  • Dividend yield stocks 
  • New issues 
  • Defensive stocks 

No matter the type of stock, the main goal for corporations and investors is to make money. 

Buying stocks 

There are a number of reasons people buy stocks. As mentioned before, the main reason is to make money. If you are self-employed and don’t have a company 401k to help build your retirement portfolio, purchasing stock may be an alternative for your retirement income. If you are looking for a way to supplement retirement income, buying stocks could be a great option to build more wealth for the future. Individuals who are savvier may choose to purchase stock as a way to build their overall financial portfolio. 

How do you select the best stock for you? 

As with any major endeavor, it is important to do your homework before buying stocks. In doing your homework, you need to consider how a company is growing in their industry. In analyzing a company, you want to get information on a company’s growth and stability. If the company’s earnings are consistently growing and they show long term stability, these are both good signs for their stocks. Other factors to consider would be how a company’s stock compares to other companies in the same industry. Factors such as debt-equity ratio, price-earnings ratio, and management performance are also worth analyzing before making the decision to buy a particular stock. 

Where do you buy stocks? 

The most popular way to buy stocks is online. A simple online search can yield hundreds of results for online stock brokerage companies. You can set up an account by simply depositing cash or cash equivalents in a brokerage account and you are ready to go. Larger brokerage firms offer the option to buy stocks online or in person. Regardless of how you choose to purchase stocks, it is important to do your homework when selecting the brokerage firm that is right for you. 

Is buying stock a good idea? 

The answer to this question really depends on who you ask. Some investors will say undeniably, yes. It is a great idea to invest in the stock market. The most successful stock investors view the stock market as a way to build a diverse long term investment portfolio. Other more conservative individuals would prefer to stick with other investment vehicles to build wealth. No matter your investment knowledge or lack thereof, it is important to make investment decisions that are best for your portfolio. 

You can turn to any national news station and hear commentators speculate on different stocks. They give you information on the stocks that are doing well and the stocks that are not doing so well. Their open dialogue can give any curious-minded person a glimpse into the world of the stock market. At a first glance, all of this can seem pretty intimidating to a new person. However, with a little bit of time and a lot of knowledge, anyone is able to select a stock that could meet their investment objectives. 

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