Stock Investing for Beginners: Basic Things to Know
If you are new in the world of investing you want to know how it works, you need some heads up. Here are some of the most basic things you need to know about stock investing. Read on!
Reason to Invest in Stocks
When you invest in stocks, you offer yourself the opportunity to grow your money ProfitiX Broker over time by buying into companies.
You can gain huge benefits by achieving larger returns than if you put all your money in bank savings account or let it collect dust underneath yours stairs.
Stock investments can offer you income way beyond your monthly paycheck in the form of dividends.
The kinds of stocks that you choose for your investment portfolio depend on your needs. If you are searching for safer investments, you could opt for blue-chip stocks.
If you want bigger, faster growth and you are comfortable with shouldering more risks, you can choose newer tech companies.
It’s not all just about watching stock ProfitiX Trading Platform prices go up and down. It’s also about learning about the companies that you want to invest in and then checking their earnings history, guidance, projections, and stock prices over a period of time, and ratings.
You may invest in individual stocks, but you can also invest in several stocks at once through the use of index funds, mutual funds, and exchange-traded funds (ETFs).
Investing in Bonds and Stocks
Investors invest in both stocks and bonds in order to diversify their portfolio and therefore spread and lower their risks.
Bonds are usually considered safer since they are essentially loans that you are giving to reputable institutions, like the government or well established companies, that you trust can pay you back with interest over time.
Stocks, on the flipside, are investments in public companies whose value can rise or fall.
Period of Investment
In general, you should invest in bonds and stocks using funds that you don’t immediately need access to. Being compelled to sell your investments just because you need cash for your immediate need or expense can cut you off from the benefits of longer term growth. You can buy or sell stocks at any time.
Other Must-Have Investments
You may also invest in other short-term savings like money market accounts and certificates of deposits (CDs) to earn a higher rate than your savings account with your local bank.
CDs, on the other hand, will tie up your money for a period of time. You can consider other investments like real estate and commodities.
Investing in a Private Company
Investing in private companies involve higher risks. Before, you needed to have a net worth of $1 million or more to be considered an accredited investor and become legible to invest with a private company, according to the US SEC (Securities and Exchange Commission). However, there have been changes and these changes offer more flexibility.
Persons with a net worth of $100,000 can invest up to 10 percent of annual income while those with less than $100,000 can invest p to $2,000 or up to 5 percent of their annual income, whichever is lesser of the two.