Investing In Stocks

Submitted by: Chris Johansen

The purpose of stock is to facilitate the exchange of securities and capital between buyers and sellers. By creating a stock market, the risk to individual investors is lessened because it spread out over a number of investors. Consumers invest in stocks to create and maintain wealth and capital not otherwise available, and companies issue stock in an effort to raise cash for growth and expansion. Most people invest in stocks by using a broker. This can be an actual firm, or an online platform. Full service brokerage firms provide clients advice and manage the day to details of your account. Discount brokerage firms offer much less customer services, but charge significantly less than full service accounts.

Investing in stocks poses a risk to the investor. There are no guarantees that your company will produce a profit and begin to pay out dividends. Analysts look at a number of market trends, political feeling, and consumer confidence and try to predict the value of a company on any given day. With this risk, however, comes the potential for bigger rewards. Stocks have continually out performed traditional savings accounts and other investments like bonds over the long term.

Stocks gain and lose value every day. When a person invests in a stock, they are essentially betting on its future profitability. The movement of a stock represents how investors are feeling about a company on any given day. When investing in stock, you should look at the bigger financial picture, and not just at recent stock gains and losses.

When looking to invest in stocks, the most important factor to take into consideration is earnings. Earnings are the profit a company makes. Public companies (those companies traded on the major stock exchanges) must report their earnings quarterly. Many stock projections are based on whether nor not a company meets or exceeds analysts earning expectations. Before you buy stock in a company, you should have a basic understanding of the company s balance sheet. You should have a firm grasp on its earnings, its sales, its debt, and its equity. Be sure to read the company s annual report and review any filings with the Security and Exchange Commission (SEC). Even if you are using a broker, you should know if your investments are sound.

Investing in stocks is an important part of any wealth management portfolio. Well-designed portfolios are diversified, meaning that the assets are divided up between a number of different companies, industries, and areas. Diversified portfolios may also include non-stock investments, like bonds, real estate, precious metals, and cash.

When you confidently invest in stocks, you help companies grow and expand. This is an important part of a healthy and robust economy. When investors are bullish , they feel as though the economy is strong and the market id supporting business development and job creation. No one can predict how stocks will grow over time. Long term investors with a diversified economy can invest in stocks that meet both their long term and short term financial needs and goals.

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