April 26, 2019
There are a lot of brokers online who offers the opportunity to buy stocks and make money.
Well, you have decided to invest online by buying stocks. You are not alone. Now, while you are reading this article millions of people around the world are investing online, helped by the several brokers or investment platforms online which make it easy and cheap.
For new investors, this is an easy way of making money. But first, they have to learn and follow some steps to introduce themselves to the financial market.
What is a stock? How does it work? Which are the main types of assets? When is the best moment? Let´s answer these questions and beyond.
A stock refers to the ownership certificates of any company. And the shares describe the stock certificate of a particular company. So, anyone who holds a particular company’s share is described as a shareholder.
In order to make it easier to understand, here goes an example: in a business or company, multiple people can own a part, so the equity of the company is divided into units. These are the shares of stocks -also described as EPS by the name put on Wall Street. When you buy or sell shares of a company through a stockbroker, you are telling the market you want to buy or sell shares of a particular company.
Types of assets: common stocks vs. preferred stocks
There are different and wide types of stocks. But the two main are the common Stocks and the Preferred stocks. Let’s see the difference between each one.
The common is the one which is referred to mostly when talking of stocks, they represent a claim on profits (dividends) and confer voting rights. Investors most often get one vote per share-owned to elect board members who oversee the major decisions made by management.
On the other side, the preferred stock is a share of ownership in a public company. While both pay a dividend, preferred stocks pay an agreed-upon dividend at regular intervals. Common stocks may pay dividends depending on how profitable the company is. Preferred stock dividends are frequently above common stock dividends.
The ‘convertible preferred stock’ is a kind of preferred stock with an option of converting into a fixed number of common shares, usually any time after a predetermined date.
The stock market: how it works
This market involves a number of investors who buy and sell shares of stocks. Their opinion about the performance of the earning of a company is the stock prices. There are some traders who think the company will do well, while there others on the other side who think in the opposite way. While sellers are trying to earn much more money than what they paid for, buyers try to get the lowest price so that they can sell it for a profit later.
This is a simple way to understand how the stock market works.
Making money through stocks
Once you´ve understood how the stock market works, it’s worth to know how can you make money from your shares of stock.
Well, there are two main ways of making money on a stock. In the first case, the stock you bought appreciates in value, which means the earning of the company are increasing or, in other words, that people will pay more money for your shares than you paid for them before. When the market is open, the stock prices vary, so you could only know how much you’ve earned once you sell the shares.
The other one occurs when a company pays a portion of its profits to you as a shareholder in the form of dividends.
What do I need to start investing in stocks?
The first thing you need to have in order to start investing in stocks is an investment account, which usually means a brokerage account.
An online brokerage account likely offers the fastest and least expensive way to acquiring stocks, funds and a range of other investments. With a broker, you can open an individual retirement account, also known as an IRA or you can open a taxable brokerage account if you’re already saving adequately for retirement elsewhere.
Once you’ve set up and funded your brokerage account, it’s time to dive into the business of picking stocks. A good place to start is by researching companies you already know from your experiences as a consumer. And, last you have to decide how many shares to buy.
This market involves a number of investors who buy and sell shares of stocks
In conclusion, you will need a broker to make the trade, money to purchase the investment and an idea of what you want to buy. With this advice, buying stocks online will be very simple. Are you ready to start? Know more through these reviews.
What are the best online trading courses for free?There are some courses that allow you to learn, practice and start trading with confidence. When we talk about the most Frequently Asked Questions, we mention the minimum requirements to start trading online. According...
The FAQ in Forex MarketAlthough the FX Market has won big popularity in the last time, there are some basic notions that all the traders must know. As we explained here, Forex is one of the largest markets in the world and refers to the market where one currency is...
How to become a stockbrokerDo you want to become a stockbroker, but you don’t know how to start? In this article, we gathered the basics steps and information you must know.Let's start for the very beginning and go back in time. The job of a stockbroker exists since...