What are stocks?
First things first, let’s take a second to understand what exactly stocks are. When you buy stocks, or shares, you are purchasing a percentage of a company. If you buy shares in Facebook, you now own Facebook (to a very small degree!) But, you are still a shareholder and are open to all the benefits this brings. As the company makes more profit, you’re entitled to a percentage of that profit, as per your investment. It’s a sensible way to build a retirement fund.
What causes stock price changes?
Stocks and shares are very much dictated by the state of the market. In a bull market, the stock market is in fine health. Everything is moving upwards in general and stock prices will rise. In a bear market, it means there is a recession or economic downturn. In general, stocks and shares go down. The individual price of stock is determined by simple supply and demand. If lots of people want shares in a company, the price goes up. This is determined by how well the company is performing and their perceived value.
Are there different tactics involved?
Very much so! There are so many different ways to play the stock market, some risky, some much safer. The safest route is playing the long game. That means finding a good, solid company to invest in who regularly return strong growth. Your money will be relatively safe and climb over time. The other trick is the trading tactic. This means buying when a company’s share price is super low. Then you’d sell it when it’s high. It’s a risky game to play as you just never know what will happen. In general, we advise all investors to diversify. This means invest in a number of varied companies. This keeps you safe if one goes the wrong way!
How do I start
You can’t invest without registering with a stock broker. You can do this from your home through online trading. This involves sending funds over the internet using a digital broker. On the other hand, you can make an appointment with a stockbroker or money manager. The upside of this is they will also advise you and give you options. We suggest spending a long time researching the options before you put any money down. Your first investment should be a safe, sensible bet so you can watch and understand how the market works.
We hope this article has shed some light on the confusing stock market! It’s a daunting place for first timers, but get it right and you’ll soon be rolling in it!