- A stock is a partial share of ownership in a company that has chosen to make its stock available to the public. When you purchase a share of the company via its public offering of stock, you in essence have become a part owner in that company. Corporations do this to raise capital.
- The idea is to buy low and sell high. If you purchase a share of stock for $10 and later sold it for $20, you profit $10 on that one share. If the price goes down to $5 per share and you sold it, you lose $5. It is possible the stock may become worthless, in which case you would lose all of your original investment.
- The best way to limit the amount of losses you could suffer investing in the stock market is to do your homework. Many people will use the advice of a stock broker when purchasing or selling stocks. A stock broker is the person who actually executes the orders to buy and sell as per your wishes. Remember, fees and commissions apply.
- To make money in the stock market, you must have the money to invest and time for it to work for you. Those who buy stocks and hold them for a longer period of time stand a better of chance of making a return on their investment. Buying and selling stocks frequently increases the risk of losing money.
- Understand what you are doing and the risks you are taking before you invest money. Only invest as much money as you can afford to lose.
