Investing should certainly not be something to be avoided at the dinner table – it shouldn’t be scary if you are ready to teach, listen or learn. And that certainly shouldn’t be a job title designated to “impress”, which is usually the case in the selfish society we live in. That being said, it’s you, in slow motion, playing around with your hard earned money. You can exhaust it entirely, but you can also double, triple or quadruple it. So, for all the newbies who want to learn more, here’s what there is to know about investing.
What is to invest?
First of all, what is investing? In short, it’s a way to save money by strategizing to get it to work for you while you’re busy having fun doing other things, until you’re ready. to use it. In other words: it’s the process of buying assets (with money you can buy them with) that will (hopefully) increase in value. These assets will then provide returns in the form of regular income payments or capital gains. The idea is that your money increases in number, overtime. The reason it’s similar, but so different from gaming, is the nature of time itself. You are Effectively placing a bet on an asset that you presume to be a “winner,” meaning you are playing with the odds, but investing is not a short-lived experience – and gambling tends to be exactly that. Keep that in mind.
There is a fine line to be crossed, because investing, like gambling, can be exciting. A victory in the markets can get you hooked and look for the next victory. Markets evolve according to patterns and trends. Investing comes in many different forms, and on a specific note, I would leave the job of a stockbroker to them: he’s a professional trader who buys and sells stocks on behalf of clients, and for them. market models make sense. For many of us, they don’t.
Investments, as I said, can be seen in a broader sense as spending money, or time for that matter, to reap a reward. However, in financial terms, it is the purchase of securities, real estate or valuables to garner income and capital gains (capital that is to say financial assets).
How does the investment work?
Not to mention the many gray areas, centrally investing works when you buy an asset at a certain price and then sell it back for a higher price. The return on investment is a capital gain and the margin between the two prices is your profit. When your investment gains or appreciates in value between the time you buy assets and the time you sell them, this is also referred to as appreciation.
Investments perform well over the long term, and it’s arguably safer to invest in stocks and shares than to leave your money in a bank – of course, “money is king”, but like everything, it is. subject to inflation (or declining purchasing power). The point here is not to invest with money that you might need in the next five to ten years, say. If you have money in the bank, open a savings account and put the available money there.
What are actions and actions?
Actions and actions are two different things, although their differences are blurry. Shares can be purchased and possesses within several types of financial instruments, such as mutual funds, trusts, real estate, etc. Technically, shares represent share units. Stocks refer to the stock market – a stock market, also known as the stock market, is where companies’ shares are issued and traded, giving them access to the growth of their businesses and, in turn, investors can realize their investment gains based on market performance. company in which they have invested.
Investors often use the word “stocks” as a synonym for publicly traded companies. For example, if you tell your broker to buy 100 shares of a specific public capital from you, you will have 100. If you ask your broker to buy 100 shares, you will buy a range of different companies. Another thing to note is that when investors talk about stocks, they are most likely referring to something called “common stock,” which is a title that represents ownership within a company. So suppose a company goes bankrupt, but you have invested in it, when the company goes into liquidation, the “common shareholders” will only receive the remaining assets after the creditors, bondholders (an investor or the owner of the securities). debt) have been paid, which may be less than what you invested.
The stock market
This is where buyers and sellers meet. Securities that are traded on a stock exchange, as I said earlier, can be: public stocks — they will be listed on a stock exchange — or private stocks, which will often be traded through brokers. The purchase and sale of private shares, via dealers is called an over-the-counter (OTC) market, and they are mainly used to trade bonds, currencies, derivatives or, when companies cannot meet the requirement to be traded on an exchange, they cannot are not listed stocks (also called pink leaves).
In order for a company to issue shares, it must start by having an Initial Public Offering (IPO) where an investment bank will help determine the type and price of shares that the general public can then purchase.
As for the stock exchange, the largest stock markets (or stocks) in the world (in no particular order) are currently the New York Stock Exchange, the NASDAQ, the London Stock Exchange, Euronext, the Hong Kong Stock Exchange, the Shanghai Stock Exchange, Shenzhen Stock Exchange, Toronto Stock Exchange, Bombay Stock Exchange and Tokyo Stock Exchange.
Trading on the stock market
An investor will bid for stocks by offering a certain price, and sellers will also ask for a specific price. When the two prices match, a sale occurs. A buyer can pay any price for the stock they want to buy, which means they are buying the stock at market value. The same goes for the seller, if he sells the stock at any price, he sells at market value.
When a publicly traded company offers stock in the market, each stock represents a share of ownership, so if the company is doing well, the value of the investor’s stock will increase as the company’s stock rises. . The company may not do well and the value of the shares will drop. The activity surrounding the stock also impacts its value, such as trends for example. When there is a higher demand to invest in a certain stock, the price tends to increase, and the same happens in reverse.
A stock exchange does not have shares, it is a market. The stocks that are traded are mostly traded through brokers, and stocks, commodities or bonds, among others, are what is actually traded. There are auction exchanges, where buyers and sellers place bids and bids simultaneously. Brokers and traders will communicate verbally in a trading room or “pit”, but this system is slowly being replaced by electronic systems.
The New York Stock Exchange (NYSE) still uses the previous one, although some functions have been transferred to electronic trading platforms. “Designated Market Makers” are the specialists physically present in the dealing room, each responsible for buying and selling shares at the auction. There is a NYSE closing auction that takes place at the end of the trading day, when the stock price is finalized for that day.
Electronic exchanges do not require a physical location where buyers and sellers meet. The Nasdaq is one of the main electronic exchanges. Dealers have their own inventory of inventory, and they buy and sell inventory on the Nasdaq as well as display their bid and ask prices. Electronics and “old school” both have listing and governance requirements, and if a publicly traded company does not meet the requirements, such as falling below a minimum price, it can be delisted from a. counter market counter.
Market values can fluctuate a lot and are influenced by the business cycle, such as recessions and bull markets. It is a living environment, with affect.
Diversification, portfolios and savings accounts
When you start investing, diversify your portfolio (the collection of financial investments like stocks, bonds, commodities, cash and cash equivalents). Don’t put “all your eggs in one basket” is a bumper sticker quote that keeps on giving. The same goes for non-investors, if you have one bank, open an account with two others. By doing this, you reduce the risk of an investment, or a mass of money, of harming your overall investment or your savings performance. You should also know more about what a commodity supercycle is and how to deal with the phenomenon.
When choosing a professionally managed investment fund that pools the money of many investors (potentially you) to buy stocks, choose one with a diversified portfolio of stocks. Compare the commissions these brokers charge, read their scorecards, and read what and who they invest in, with your money, to decide whether you agree with the company they are investing your money in first, and how. themselves perform. There is a level of trust, research and projection involved on your part. It doesn’t hurt to follow the markets, don’t take daily fluctuations into account as much as the overall trends you will start to recognize.
In the meantime, consider opening a basic, instant withdrawal, low-interest savings account with your bank, and possibly another bank, as funds in savings accounts are insured by the federal government. Then do your homework from there.