Buying Stock 101
Investing in the stock market provides significant opportunities to generate additional income provided you have a good understanding of the basic concepts and strategies required to buy stock. There is risk involved, but it can be controlled and you can pick the level of risk you can tolerate. A good starting point is to learn the basics of buying stock.
Other People Are Reading
-
History of Buying Stocks
-
Wall Street Stock Exchange Buying and selling stocks began in the United States more than 200 years ago, according to Stock Marketing Investing. It all started when the colonial government made the decision to sell bonds to fund war efforts. In 1792, 24 merchants decided to meet daily at Wall Street for the purpose of trading stocks and bonds, founding the New York Stock Exchange. Companies began seeking funding through the exchange in the early 1800s. A century later, stocks were traded on the market.
Learning About Stocks
-
Learn Stock Buying Before you begin buying stock, read good books and other helpful information. Also search online. Also consult a glossary of stock market terms like those that can be found on NASDAQ's website.
-
Stock Buying Objectives
-
Set Your Objectives Before buying stocks, decide your objectives. Answer a number of questions to help you set objectives. For example, determine how much risk you are willing to take. If you are a younger investor, you can take more risks for potentially higher return since you have many years to recover from any stock loss. Also decide whether you are looking for ongoing income from stock dividends or whether your primary objective is the appreciation (growth in value) of stocks.
Research
-
Do Your Research First The first step in considering a stock is to research the company for which the stock is traded. Start with companies or industries you know. Understanding these companies makes it easier to evaluate investment alternatives. In addition, you should follow and become acquainted with stock market trends for the overall market and individual stocks. One good source for this information is Yahoo Finance, according to the Winning Investing website.
Factors to consider when evaluating a stock include cash flow per share, average daily volume, high and low sale price for the year, and financial health grade from Morningstar, which conducts research on stocks and other investments.
Set Up a Broker Account
-
Sign up for a stock broker account, which allows a broker to buy and sell stock on your behalf. Decide between a full service broker or a discount broker. A full service broker offers recommendations and guidance in stock purchasing. If you want to do the research yourself and simply have a broker execute trades, consider a discount broker.
Another important consideration is the individual broker you will be working with. Determine whether the broker is easy to talk to or whether he pressures you into buying decisions. Choose a broker willing to help educate you as a new stock market investor.
-
References
Resources
- Photo Credit Buy image by Francois du Plessis from Fotolia.com wall street with flag image by Tomasz Cebo from Fotolia.com learning woman #13 image by Adam Borkowski from Fotolia.com Bullseye image by Towards Ithaca from Fotolia.com glasses on book image by Melking from Fotolia.com
