Basics of Stock Investing

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Basics of Stock Investing

Whether you are beginning investing in the stock market or an old hand, knowing and sticking to the basics of stock investing is always a good idea. So, what are the basics of stock investing? The basics of stock investing are that you are buying shares in the ownership of a company. You do not have the right to run the company but you can vote your shares on major company issues and help elect a board of directors once a year. You are not personally liable for company debt or actions and if the company goes bankrupt your claim on the assets of the company is less than that of creditors.

Companies sell stock and give away partial ownership in order to avoid debt repayment and interest payments. The benefits of stock ownership are the receipt ofdividends and the appreciation of the value of your shares of stock. Over years and decades stocks in American stock markets have substantially outperformed bank interest as well as government and corporate bonds.

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Basics of Stock Investing

  1. 1. Basics of Stock Investing By www.CandlestickForums.com
  2. 2. Whether you are beginninginvesting in the stock market or an old hand, knowing and sticking to the basics of stockinvesting is always a good idea. www.CandlestickForums.com
  3. 3. So, what are the basics of stock investing? www.CandlestickForums.com
  4. 4. ? The basics of stock investingare that you are buying shares in the ownership of a company. www.CandlestickForums.com
  5. 5. You do not have the right to run the company but you can vote your shares on major companyissues and help elect a board of directors once a year. www.CandlestickForums.com
  6. 6. You are not personally liable for company debt or actions and ifthe company goes bankrupt your claim on the assets of the company is less than that of creditors. www.CandlestickForums.com
  7. 7. Companies sell stock and giveaway partial ownership in order to avoid debt repayment and interest payments. www.CandlestickForums.com
  8. 8. The benefits of stock ownershipare the receipt ofdividends andthe appreciation of the value of your shares of stock. www.CandlestickForums.com
  9. 9. Over years and decades stocks in American stock markets havesubstantially outperformed bank interest as well as government and corporate bonds. www.CandlestickForums.com
  10. 10. One of the basics of stock investing is the decision to “buyand hold” stock or to trade stock. www.CandlestickForums.com
  11. 11. The buy and hold strategy says that it is really not possible to outguessthe market and all you end up doingwhen you repeatedly buy and sell is make the stock broker rich and repeatedly pay taxes on capital gains. www.CandlestickForums.com
  12. 12. The stock tradingstrategy relieson individual stocks having their cycles, their ups and downs. www.CandlestickForums.com
  13. 13. Thus, the stock trading strategy says that you can make evenmore money by market timingthan by using the buy and hold strategy. www.CandlestickForums.com
  14. 14. Another of the basics of stock investing is that, even as a smallinvestor, you have a right to have your voice heard at the annual meeting. www.CandlestickForums.com
  15. 15. You can attend and you can speak your mind. However, thenumber of votes you can cast onany issue is the number of shares that you hold. www.CandlestickForums.com
  16. 16. Receiving a stock certificate is one of the basics of stock investing. www.CandlestickForums.com
  17. 17. You are entitled to hold this certificate personally. www.CandlestickForums.com
  18. 18. However, you need to keep it in a safe place like a safety depositbox and you need to present it if you selling shares of your stock. www.CandlestickForums.com
  19. 19. Thus a stock investor will usuallyleave his or her stock certificates with the brokerage through which they buy or trade stock. www.CandlestickForums.com
  20. 20. This is known as holding your shares in “street name.” www.CandlestickForums.com
  21. 21. How you are paid and how muchyour stock is worth is usually the most important of the basics of stock investment. www.CandlestickForums.com
  22. 22. Many companies take part oftheir profit after taxes and send quarterly dividend checks to their shareholders. www.CandlestickForums.com
  23. 23. This is a nice benefit of stockinvesting, especially for retirees. www.CandlestickForums.com
  24. 24. However, the dividends are taxable and the profit of a US company is taxed at 50 before the dividend ispaid. Thus many companies reinvestnearly all earnings in order to grow the company. www.CandlestickForums.com
  25. 25. Stock appreciation is important. If you invest in a stock thatappreciates in value at 10 to 12 percent a year, which is not uncommon, the value of your shares will double every 6 to 7 years. www.CandlestickForums.com
  26. 26. In fact, the company will often“split” the stock and issue two or three shares for one when thestock price goes up substantially. www.CandlestickForums.com
  27. 27. This is another reason to leave your stock in street name. www.CandlestickForums.com
  28. 28. Unlike when you trade stock you need not pay taxes on the longterm appreciation of your stock shares until yousell stock. www.CandlestickForums.com
  29. 29. This untaxed appreciation of stock value can substantiallyimprove the exponential growth of stock value. www.CandlestickForums.com

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