Stock Investing - Understanding Stocks and Their Benefits
Everyone has heard of the stock market, either through a fictional account in a movie or television show, or because someone they know has invested money on it.
Although many people have this picture of the crowded trading floor covered in trade slips and full of shouting traders, fewer people actually have a good grasp of what stocks actually are, how the trading works, and how the stock market can be a place where you earn money by spending money.
If you're thinking about putting some of your hard earned money into the stock market, it's important to know a little bit more about how the whole process works and what the benefits are of participating.
The first thing that you should know about stocks is that they are a way for members of the general public to have a very small percentage of ownership in any company that has gone public and agreed to accept investments from anyone that has the money for their shares.
The people that invest their money in a company's public stock are known as shareholders in that company, and in certain situations are entitled to a portion of that company's future profits.
Another important bit of knowledge is the fact that there are two different kinds of stocks that you can buy in the public market, common stock and preferred stock.
Most public investors hold common stock, which gives them the right to vote on major decisions being made by the company, and to share in any profit dividends when they occur.
If you are ever listening to the news and hear them talking about stock going up or down, you should know that they are talking about common stock.
Preferred stock comes with less privileges of ownership, but typically pays out higher and more consistent dividends, which makes it attractive to investors.
One of the best things about being an owner in a promising company through public investment stocks is that you are not held to the same strict liability as the actual owners.
This means that if you invest money in a company, and that company ends up doing poorly and possibly going bankrupt, your stock will simply become worthless.
Depending on the amount of money you invested, you could lose quite a bit, however the creditors can't come after any of your savings or assets in order to collect the company debt.
Although many people have this picture of the crowded trading floor covered in trade slips and full of shouting traders, fewer people actually have a good grasp of what stocks actually are, how the trading works, and how the stock market can be a place where you earn money by spending money.
If you're thinking about putting some of your hard earned money into the stock market, it's important to know a little bit more about how the whole process works and what the benefits are of participating.
The first thing that you should know about stocks is that they are a way for members of the general public to have a very small percentage of ownership in any company that has gone public and agreed to accept investments from anyone that has the money for their shares.
The people that invest their money in a company's public stock are known as shareholders in that company, and in certain situations are entitled to a portion of that company's future profits.
Another important bit of knowledge is the fact that there are two different kinds of stocks that you can buy in the public market, common stock and preferred stock.
Most public investors hold common stock, which gives them the right to vote on major decisions being made by the company, and to share in any profit dividends when they occur.
If you are ever listening to the news and hear them talking about stock going up or down, you should know that they are talking about common stock.
Preferred stock comes with less privileges of ownership, but typically pays out higher and more consistent dividends, which makes it attractive to investors.
One of the best things about being an owner in a promising company through public investment stocks is that you are not held to the same strict liability as the actual owners.
This means that if you invest money in a company, and that company ends up doing poorly and possibly going bankrupt, your stock will simply become worthless.
Depending on the amount of money you invested, you could lose quite a bit, however the creditors can't come after any of your savings or assets in order to collect the company debt.
