Learning to Invest
Learning to invest wisely takes time and patience. It will pay rewards for years to come. Learning to invest requires that you start by learning the terminology and mechanisms of the stock market, of buying stocks and selling stocks. You will need to learn to evaluate companies whose stocks you want to purchase and you will need to learn about market timing. You will want to develop an investment strategy.
A dictionary definition of the word “invest” is “to apply money for profit” or “put money for profit in stocks, etc.” The point of learning to invest well is to maximize your profit while minimizing your risk while investing in stocks, bonds, Forex, etc. The balancing of risk reward rations is important in learning to invest. Start with stock market terminology.
Shares of stock represent the amount of money that an investor can purchase in order to invest in a corporation and become one of many shareholders. Each share represents ownership in the company and this ownership entitles the shareholder to certain rights such as dividends and voting rights. Shares in a company entitle the holder to a share of company assets if the company goes bankrupt but only after primary creditors.
Stocks are bought and sold on stock exchanges. A stock exchange is an institution that hosts a market where stocks and bonds, options and futures, and commodities are traded. It is where buyers and sellers can come together during specified hours to trade on business days.
US stock exchanges are the New York Stock Exchange and the NASDAQ. One can buy and sell stocks through a stock broker or online with a trading account.
When learning to invest it is wise to have a model to follow, someone whom you trust and it is wise start with investing money in small amounts. A good piece of advice is to stick with stocks in companies whose products you know and understand or market sectors in which you have expertise.
For example, a physician may start using a very effective medicine to treat his or her patients. The physician understands that this medication will become the treatment of choice for a given disease. Stock investing for beginners does not mean the beginners have no life experience. Use what you know to help your stock investing.