What are Stocks?

The value of a stock depends on whether its shareholders want to hold it or sell it, and on how much other investors are willing to pay for it. If a company is doing well or investors have confidence in the company’s future, the stock’s value may go up. Through 1994, stock prices, as measured by the S&P 500 (an index based on the stock of 500 large companies), rose in 16 of the previous 20 years. Shares in a company can lose and depreciate value if the company is poorly managed, underperforms, or the stock simply draws no interest from investors. Here’s a stock tip, check the beta value (a measurement of risk) of each stock before making a decision.

Stock investing, on the other hand, can potentially deliver much higher returns because they are a riskier investment. Shares in a company can lose and depreciate value if the company is poorly managed, underperforms, or the stock simply draws no interest from investors. Here’s a stock tip, check the beta value (a measurement of risk) of each stock before making a decision.
Purchasing Stocks

Known as shares or equity, a stock is a type of security that signifies ownership in a corporation and represents a claim on part of the corporation’s earnings and assets. Today, millions of people in the U.S. own stock in publicly traded companies or in equity mutual funds that invest in stocks.

The long-term value of stock market investments tends to grow with the economy. Through 1994, stock prices, as measured by the S&P 500 (an index based on the stock of 500 large companies), rose in 16 of the previous 20 years. Holders of common stock can receive dividends, which averaged more than 4 % annually based on their investments’ market value.
The Risk of Investing in Stocks

Investors see a capital gain as the stocks in which they invest rise in its value. Investors can also profit by receiving dividends, which is the portion of a corporation’s earnings that is paid to stockholders.

The value of a stock depends on whether its shareholders want to hold it or sell it, and on how much other investors are willing to pay for it. If a company is doing well or investors have confidence in the company’s future, the stock’s value may go up.
Benefits of Investing in Stocks

A typical Investor would usually buy stocks through an online or traditional brokerage firm. Known as broker/dealers, these are investment firms that are licensed to buy and sell securities by the Securities and Exchange Commission (SEC). Investors may also buy stock directly from the company that issues it through a dividend reinvestment plan (DRIP).

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