Table of Contents
Chapter 1: Growing Your Wealth with Investments
Chapter 2: Learn How To Invest
Chapter 3: Cash Investments
Chapter 4: Investing in Stocks
Chapter 5: Investing In Bonds
Chapter 6: Investing in Real Estate
Chapter 7: Investing in Mutual Funds
Investing in Stocks
The frenzied numbers and the intricate terminology of the stock market can be overwhelming if you are new to it. But investing in stocks is not as tricky as it seems, if you spend time on understanding it. To begin with, a stock is a share you own in a company that entitles you to a proportional share of its profits and losses. Stocks can be divided into two major categories:
- Common stocks – Common stocks are the regular stocks you purchase for long-term benefits or for a quick trade in the stock market. Apart from the value of the shares, you can earn income on them in the form of dividend.
- Preferred stocks – Preferred stock is a combination of a common stock and a bond. Preferred stock holders are given the first priority when it comes to payment of dividend and over the company’s assets in case of bankruptcy.
Stocks can be acquired in four ways. The first is by investing in retirement plans like the 401k or 403b depending on where you work. Secondly, you can invest in stocks through one of the Individual Retirement Accounts or the IRA. The third and the most common method used to purchase stocks is the use of a brokerage account, which lists your stock holdings and allows you to trade online.
Before you invest in a company’s stocks, you should take time to research on its performance in the market, the dividend you can earn and the trends involved in its trading. If you choose the right stocks, you can enjoy these benefits:
- Regular dividend income.
- Huge profits when the company offers repurchase of shares
- Increasing your share holdings, by reinvestments of your funds, every time the company expands its business.
- Increase in share prices when there is positive news about the company.
To accumulate wealth by investing in stocks, you must try to hold your shares for long-term. If the company’s performance is going up, your investment also follows suit. But remember that if it fails to deliver you may end up losing the money you invested in those stocks.
Next Chapter: Investing In Bonds