A few days ago, our family was traveling to a college event together. We were listening to a podcast within the car’s stereo and the host was talking about how they were concerned about the stock market being so high. My children are normally curious creatures and so they wished to know why this web host was so worried, and this led into an extended discussion about investing in stocks as opposed to investing in other things. They wished to know what stocks and shares were why someone would get them, and how someone would do this (you don’t just visit a store to buy them).
After we arrived at our destination, I noticed that the discussion we’d would lead to a pretty good article actually, one that I’d have found incredibly valuable a couple of years ago when we were first learning about investing. Here are twelve key things everyone ought to know about buying stocks. 1: Buying stocks is one of many options for trading your money. It’s fairly hard to avoid hearing about the stock market in a single way or another.
News about the stock market shows up on virtually every news survey you listen to on the radio or on television. However, just because the paper and the financial mass media speak nonstop about stock trading doesn’t imply it’s the only way to invest your money. It’s merely one option. One could keep their profit a savings account simply, earning a low return with very low risk. One could invest in real estate or bonds or collectibles or precious metals or foreign currency.
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All of these things involve some degree of risk involved, offer some known level of come back, and have differing examples of liquidity (liquidity essentially means how easy it is to sell an item once you possess it). You can even invest in yourself, improving your future earnings potential. Don’t ever agree with the basic idea that stocks and shares are what you must spend money on.
They’re just one single option that happens to change enough all the time that it creates news. Many other investments are more steady and peaceful, meaning they aren’t talked about almost as much. 2: Investing in stocks comes with substantial risk, for a while especially. If you listen to the news headlines every day, you’ll undoubtedly hear about various numbers like the S&P 500 and the Dow Jones Industrial Average increasing and down some amount. Maybe it went up 1% today or down 0.5% yesterday. That’s a lot of along movement.
You can simply gain – or lose – as much in one day on your investment as you’ll gain in an entire season if that money was in something stable and secure like a checking account. Another problem is that you can have periods where there are far more down times than there are up days. The last-mentioned part of 2008 is an interval where that occurred and the stock market lowered about 40% that of (depending about how you measure it).
6,000 at the end. So, why do you ever spend money on stocks? Over the long term – more than a decade – the stock market tends to grow at a rate around 7% per year. It requires a lot of years to strategy that average, though. Sometimes, it’ll be higher; sometimes, it’ll be lower. It’s not just a guarantee, though.
That’s just what has occurred historically and, in the foreseeable future, that trend should continue as long as people keep being more productive and generating good ideas. If you need a guaranteed return on your money, you won’t get an annual return anything like this unless the economy drastically changes. The stock market makes a lot of sense over the future.
It doesn’t make much sense for people who aren’t paying a great deal of attention in the short term. I’d say that the difference is somewhere around the ten-season mark. 3: Most people spend money on stocks by opening a merchant account with a brokerage – today, that’s usually done online at the brokerage’s website.
How exactly do you get stocks? A lot of the right time, people do this by opening a merchant account with a brokerage company. A brokerage company is an ongoing company that has usage of the stock exchange, so take instructions from you they’ll, go directly to the stock exchange, and buy or sell stocks and shares regarding your instructions.