What Are The Basics Of Stock Investing?
Unfortunately a lot of people are suffering because of the financial crisis. This means that many are looking for alternative ways to make money, and one way that people are able to do this is through investing in stocks. In order to understand how people are able to earn from this is for me to explain the basics of stock investing.
When a business is in need of funds what it will do as an alternative to a loan is to allow people to purchase shares, which when sold in bulk are known as stocks. If the business becomes successful and earns well then the people who have the stocks will also be able to earn from this.
You can gain from the profits you put in but there is also a possibility you may not, especially if the business goes bust which is why you will want to invest in something worthwhile.
The different kinds of stocks that are available are commonly split into two different categories. The first kind is called a common stock and the other is a preferred stock. With both of them the money you can get is called a dividend. This is the amount that is decided to be split among the people who have investments in the company, you can also benefit from surplus profit.
To explain common stock it is basically when you invest in a business you choose and you will be able to receive a percentage of any profits, this amount will have been decided before the money is sent out by the management. The amount you will be due to receive will be dependant on what other people have invested in relation to you.
I can only explain to you the way it is divided by giving you an example. If a dividend is announced and the company has $100'000 in profits then the management decided to give stock holders 10% of this, the 10% would then be divided among all the stock holders, so if you had 50% of the stock then you would receive $5'000.
The alternative that you can choose to invest in is called preferred stock and there are many reasons it is known as such. The preferred stock investors are have a set percentage that they are given as soon as a dividend is announced and one advantage at the very least they have over common stock holders is that they are among the first to receive payment where as the common stock holders have to wait.
Basically when you put your money into a business you will be investing into it, and your profits will rise and fall accordingly, if you wish you are able to sell on these stocks so that you can make further profit, and many people do so successfully, but to know when is the best time to buy and sell you will need to keep your eye on the stock market. - 23212
When a business is in need of funds what it will do as an alternative to a loan is to allow people to purchase shares, which when sold in bulk are known as stocks. If the business becomes successful and earns well then the people who have the stocks will also be able to earn from this.
You can gain from the profits you put in but there is also a possibility you may not, especially if the business goes bust which is why you will want to invest in something worthwhile.
The different kinds of stocks that are available are commonly split into two different categories. The first kind is called a common stock and the other is a preferred stock. With both of them the money you can get is called a dividend. This is the amount that is decided to be split among the people who have investments in the company, you can also benefit from surplus profit.
To explain common stock it is basically when you invest in a business you choose and you will be able to receive a percentage of any profits, this amount will have been decided before the money is sent out by the management. The amount you will be due to receive will be dependant on what other people have invested in relation to you.
I can only explain to you the way it is divided by giving you an example. If a dividend is announced and the company has $100'000 in profits then the management decided to give stock holders 10% of this, the 10% would then be divided among all the stock holders, so if you had 50% of the stock then you would receive $5'000.
The alternative that you can choose to invest in is called preferred stock and there are many reasons it is known as such. The preferred stock investors are have a set percentage that they are given as soon as a dividend is announced and one advantage at the very least they have over common stock holders is that they are among the first to receive payment where as the common stock holders have to wait.
Basically when you put your money into a business you will be investing into it, and your profits will rise and fall accordingly, if you wish you are able to sell on these stocks so that you can make further profit, and many people do so successfully, but to know when is the best time to buy and sell you will need to keep your eye on the stock market. - 23212
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posted by X - Men @ 6:41 AM
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