The Stock Exchange, The Dummy And You
Ok, so you want to dabble in the stock market. Unfortunately, you don’t know how and where to begin. So what do you do?
Well, the 1st relevant thing to do is ask the essential question of what is a stock and its importance.
A stock symbolizes ownership of a corporation. Some view stock as certificates. So that the more stocks someone owns of a particular company, the more of the company they own. And the more the company they own, the bigger the influence they have in running the company. This is named equity investment.
The next thing to do is familiarize yourself with fiscal terms like ‘price-earnings ratio’, ‘margin’, ‘option’, ‘earnings per share’ and ‘leverage’.
Then, it’s on to knowing where and how to essentially buy stocks.
There are two ways to buy stocks:
1. Brokerage service 2. Online exchanges ( e.g. Banks )
Exchanges are services that let stockholders to access stocks all over the world. Here, they can buy and sell stocks without the need for a broker. Certain banks allow you to set up your own stock portfolio and buy and sell stocks online using the money you have in these banks.
Brokerage services are rendered by brokers. These middlemen do all the work for you. They research the stock market, give advice, and buy and sell stocks according to the wishes of their clients. These brokers earn a commission from the stocks bought or sold.
Once you have selected the correct way to buy and sell stocks, the very next thing to do is to apply for an account. As stated earlier, exchanges allow you to monitor and control your stock portfolio personally. If you choose to go into the stock trade with a bank, then ask your bank the specifics of setting up your own account.
If you choose to trade stocks via a broker, find a reputable broker and ask them to open and manage an account for you.
Once you have successfully set up an account, it’s time to study the stock exchange and plan your strategy: will you be conservative in investing your money? Or will you be aggressive? Are you in it for the long term? Or are you a day trader?
After you have identified your plan, it’s time to do some research on the stocks offered in the market. Having a broker will significantly make it easier for you as they will do the research and give you advice. But, it is still best to study the market yourself.
Be warned though, the stock market is volatile. Be prepared for a roller-coaster ride.
Want more info? Go to stock market basics for more stock market tips.
