How to invest in stocks

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How to invest in stocks
What are stocks/shares

We’ll show you how to invest in stocks. Stocks are shares in a company that is publicly listed on a stock exchange. Each share is a part ownership of the company it is part of. Investors that have a 51% of the shares have what is called a controlling interest as they have the majority of the shares in the company.

How to invest in stocks

To invest in stocks, you will require money to buy the shares, a broker to buy and sell your stocks and research to decide which shares you wish to invest in. Once you have some stocks, it will become your stock portfolio. Your portfolio contains all your stocks that you own.

When starting out you need to research the sort of stocks you want to invest in. Will you become a trader, buying and selling on a regular basis. Or a long term investor where you hold onto your stocks indefinitely. Are you interested in blue chip stocks (great shares that are the industry backbone), start up companies, commodities or dividend paying stocks.

To buy your stocks, you will need a broker of some description. Brokers used to be the only way to buy stocks. These days there are many options to buy stocks from traditional brokers to online brokers and apps that allow you to invest in stocks. Depending how you buy stocks will determine how much control you have over your investments.

If you research your companies and decide which stocks you want to invest in. A brokerage that allows you to pick your stocks is your best option. There are apps which you deposit your funds into and the stocks that are bought are determined by the managers of these apps.  You can usually pick a certain category of  stocks, but not individual stocks, for example, the app may have a conservative spread of stocks and then a more aggressive spread of stocks.

Which is better, short or long term investments

Your stock investments are very individual, some people have a low risk mind set, while others have a high risk mind set. No matter which category your in, always be aware that your investments are not guaranteed to perform.

For those with a low risk threshold, government bonds or cash investments are the most popular. A balanced stock portfolio is the norm as these contain a spread of low risk shares and high risk shares. More aggressive portfolios contain higher risk shares, these may be trending stocks, start up companies and new technologies.

After considering the risks and what your happy with, your next decision will be, whether your want to trade regularly or if you want to hold onto your investments and compound the dividends. There are pros and cons for both methods of stock investment.

Pros for trading include being on top of the market and making decisions on what the market is doing at a certain time. Cons for trading are the time required to monitor the market, the fees attached to trading stocks and are you going to get it right the majority of the time.

Check our post on why you should have multiple sources of income

For long term investments the pros are you can weather any dips in the market, relative passive in nature and history shows that stocks have continued to rise over many decades. The cons for long term investments are profits may take a fair length of time to appear.

No matter what type of investor you are, if you believe the company you have stocks in has reach a pinnacle, it maybe the best time to make a profit. By this I mean take out your original investment and leave the increases in shares. This is a way of hedging against any downturn that may occur.

Check out our post on reaching your goals

 

Advantages of stocks

There are other advantages of owning stocks besides any profits you make when trading stocks. Some of these are stocks being the best return on investment, discounts from companies you have invested in, tax advantages, stocks compound returns and you are actually a part owner of the company you have invested in.

Stocks are a great way to increase your wealth. If you have a diversified portfolio and patience, stocks provide a relative safe way to increase your income and wealth.

We hope this post how to invest in stocks is of help to you.

 

 

How to invest in stocks