Everyone wants a fast and easy way to make money.
The time and compounding interest are two things you need to focus on to build wealth.
For the newbies, the stock market may seem daunting.
But investing in the stock market can offer some profitable return that can’t be done through cash savings.
We have designed a simple guide to help you get started with the investment decisions.
Let’s start with understanding stock.
Do you wonder what stock is and why people buy shares in stock?
It’s a place for the trading of shares or stocks.
You will find many stock markets in the world.
Companies group their shares for market index.
The average is calculated by the combined value of the companies.
Usually, the companies with the same size and value form a tie-up.
Cases where companies of different sizes combine, the bigger company has the most effect on the index value.
Based on the size and niche of the company, market index value gives an estimate of the movement in the market. This tool is used by economists and investors to predict the market and compare the values of shares.
How does investing in shares work? What are stock mutual funds and individual stocks?
Stock market investment carries risk.
It’s crucial to approach it in a well-planned manner.
The shareholders hold some amount of shares from a company.
They can get benefit in two ways: dividends and capital gains.
A dividend is a profit distributed by a company to the shareholders while the capital gain is the amount a shareholder get when they sell a stock at a higher rate than what they initially purchased if for.
Stock mutual funds:
Also known as exchange-traded funds let you purchase some part of different stocks in a transaction.
This allows you to put multiple funds together for a diversified portfolio.
You can buy a share from a specific company.
The stock market can lessen your risk while individual stocks can pay you handsomely as well as put you on risk.
You can build a diversified portfolio but it needs significant investment.
How do you make money in the stock market?
How do share prices move?
Some of the factors that affect share are:
• Global or national economy
• How a company is performing
• Specific company based factors- strategy changes and management decisions.
Please note: share market is just not limited to these factors.
You need to stay updated with the news of the company in which you invest.
How can you buy shares?
Usually, shares are traded frequently. But an investor can buy them is when they are created and issued to people.
How to start investing in stocks?
The Secondary Market: This stage is followed by the IPO stage.
The shares can be bought and sold through the stock exchange.
You need a stockbroker when buying a share in the secondary market.
These stockbrokers provide services under three levels:
• Discretionary management
How to make a share investment?
You don’t need a large amount to make investments. You can start investing with a smaller sum as well as a lump sum based on your savings.
How to set a budget for the investment?