With the uncertainty of the current job market, many are looking for other income options or ways to make their money grow for themselves. One way to achieve this is to invest in the stock market.
Although most people think that this is a complex task that only financial professionals can complete. Here’s the truth: anyone can do it.
Before we get started, here’s a guide on the basics of investing in stocks.
What should be invested in stocks?
Investing in stocks is a way to potentially increase your money over time by acquiring ownership of companies that you think can do well.
Here are some financial basics for investing in stocks:
Share price
The price of a share is the current market value of a share of a company. It is determined by the supply and demand of the stock.
Capitalization
The market capitalization of a company is the total value of all outstanding shares. It is calculated by multiplying the current share price by the number of outstanding shares.
Dividend
Dividends are a part of a company’s profits that are paid to shareholders. Not all companies pay dividends, and the amount and frequency of dividends may vary.
Health risks
Investing in stocks involves risks. The share price can rise or fall, and there is no guarantee that you will make a profit. Past performance does not prejudge future results.
Diversification
Diversification is a peril mitigation strategy by investing in a variety of stocks and other assets. This can help mitigate the impact of a company’s or an industry’s poor performance.
Brokerage accounts
To buy and sell shares, you need a brokerage account. There are a variety of online brokerage options that can differ in terms of fees, account minimums and investment options.
Tax
When you sell a stock for a profit, you owe capital gains taxes on the amount of profits. The amount of taxes owed depends on the length of time you held the share and your tax bracket.
Why invest in the stock market?
If you still have reservations about investing in the stock market. Here are some reasons why you should:
Growth potential
Historically, the stock market has generated higher returns than other types of investments such as bonds or savings accounts. In the long run, investing in the stock market has the potential to increase your money and create wealth.
Inflation protection
Investing in stocks can help protect against inflation, which undermines the value of money over time.
Property
When you buy a share, you are buying the ownership of a company. This can be interesting for investors who want to have a say in the management of a company and who want to support companies aligned with their values.
Income
Some stocks pay dividends that can provide a steady stream of income. This can be particularly interesting for investors looking for an income in retirement.
As mentioned above, investing in the stock market involves risks and there is no guarantee of return. It is important to do some research, diversify your investments and have a long-term investment horizon.
Brokers to help you get started
Now that you have the basics to invest in stocks, it’s time to find a brokerage company to open your new account and create your portfolio. There are many brokerage companies that allow you to own investments in stocks.
Here are a few to get you started.
Loyalty
Fidelity is an established brokerage firm that offers a range of investment options, including stocks, bonds, mutual funds and exchange-traded funds (ETFs). It provides an easy-to-use trading platform and has no minimum account or commissions.
Charles Schab
Charles … SchAb is another popular brokerage firm that offers a variety of investment options, including stocks, bonds, mutual funds and ETFs. It has an easy-to-use trading platform and no minimum account or commissions.
TD America
TD Ameritrade is a popular brokerage firm that offers a wide range of investment options, including stocks, bonds, mutual funds, ETFs and options trades. It offers a solid trading platform and no minimum account or fees.
ETRADE
ETRADE is an established brokerage firm that offers a range of investment options, including stocks, bonds, mutual funds and ETFs. It offers an easy-to-use trading platform and no minimum account or fees.
Blackbird
Robinhood is a new brokerage company offering commission-free transactions on stocks, options, ETFs and cryptocurrencies. It offers an easy-to-use mobile trading application and no minimum account or fees.
Start your investment journey today! You will be satisfied with your decision.