What Are The Basics Of Stock Investing?
Unfortunately a lot of people are suffering because of the financial crisis. This means that many are looking for alternative ways to make money, and one way that people are able to do this is through investing in stocks. In order to understand how people are able to earn from this is for me to explain the basics of stock investing.
The way stocks work is that if there is a business that is in need of money but does not have the finances, rather than sell the business they sell shares, which when in bulk are called stocks. If the business picks up then you are able to profit and earn a lot more than what you put in, or if the money was sitting in a bank.
The more you invest the more you are likely to gain or possibly lose so you will need to be confident that you are investing in a worthwhile business or research cause.
Stocks are usually put into two different categories and there are benefits to both, but you will have to decide which one will suit your needs and personal preference. The one kind of stock is a common stock, and the other a preferred stock. Which ever one you choose you have will be paid when a dividend is announced. This is basically an announcement of when the percentages that have been earned are to be paid out.
To explain common stock it is basically when you invest in a business you choose and you will be able to receive a percentage of any profits, this amount will have been decided before the money is sent out by the management. The amount you will be due to receive will be dependant on what other people have invested in relation to you.
I can only explain to you the way it is divided by giving you an example. If a dividend is announced and the company has $100'000 in profits then the management decided to give stock holders 10% of this, the 10% would then be divided among all the stock holders, so if you had 50% of the stock then you would receive $5'000.
You can choose the other form of stock investing which also has its benefits, and this is known as preferred stock. The way this differs from common stock is that the percentage you receive on dividend announcement is a set percentage, and you will be priority to receive the payments over those who have invested in common stock.
When you choose to purchase stock you will be making an investment to the company you choose. This is why you are able to get a percentage of the earnings, yet you are able to sell these stocks on, and you can benefit when the business does well as you can sell the stock for a lot more than you originally purchased. You will need to keep an eye on the stock market to see in what sectors the most profit is being received. - 23305
The way stocks work is that if there is a business that is in need of money but does not have the finances, rather than sell the business they sell shares, which when in bulk are called stocks. If the business picks up then you are able to profit and earn a lot more than what you put in, or if the money was sitting in a bank.
The more you invest the more you are likely to gain or possibly lose so you will need to be confident that you are investing in a worthwhile business or research cause.
Stocks are usually put into two different categories and there are benefits to both, but you will have to decide which one will suit your needs and personal preference. The one kind of stock is a common stock, and the other a preferred stock. Which ever one you choose you have will be paid when a dividend is announced. This is basically an announcement of when the percentages that have been earned are to be paid out.
To explain common stock it is basically when you invest in a business you choose and you will be able to receive a percentage of any profits, this amount will have been decided before the money is sent out by the management. The amount you will be due to receive will be dependant on what other people have invested in relation to you.
I can only explain to you the way it is divided by giving you an example. If a dividend is announced and the company has $100'000 in profits then the management decided to give stock holders 10% of this, the 10% would then be divided among all the stock holders, so if you had 50% of the stock then you would receive $5'000.
You can choose the other form of stock investing which also has its benefits, and this is known as preferred stock. The way this differs from common stock is that the percentage you receive on dividend announcement is a set percentage, and you will be priority to receive the payments over those who have invested in common stock.
When you choose to purchase stock you will be making an investment to the company you choose. This is why you are able to get a percentage of the earnings, yet you are able to sell these stocks on, and you can benefit when the business does well as you can sell the stock for a lot more than you originally purchased. You will need to keep an eye on the stock market to see in what sectors the most profit is being received. - 23305
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Are you confused about how to invest? Don't worry, you aren?t by yourself! BeforeYouInvest.com is a great resource for you to learn about a variety of investment topics from how much the average retirement savings should be to low minimum investment mutual funds for beginner investors.
posted by Mr. Forex at
3:15 AM
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