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So you've heard people talk about the stock market, and it sounds interesting, but you're not sure what it's all about. Let's say you suddenly inherit $1,000, and you'd like to find a way to increase that amount while owning part of a business. Your first step is your decision to buy stock. Stock is ownership in a company. Public companies sell shares of stock, or ownership, to individuals who want to invest their money in that company.
Next, you need to decide in which stocks you want to invest. How do you do that?
You need to know something about the company and its products. Some investors read corporations' annual reports or watch the performance of a company's stock before they buy it. Others like to invest in what they know: If you have a favorite product, such as a specific brand of cell phone for example, the company that makes that product might be a good investment for you. Many young investors choose to set their sights on fast food chains, soft drink companies, clothing makers, retailers, and the entertainment industry. If you're a faithful customer, it makes investing in the company even easier, because you'll be helping the stock value by buying the company's products!
There's both knowledge and luck involved in picking stocks, but the goal is to "buy low and sell high." In other words, you want to buy a stock that is selling at a low price per share with the potential to increase in value so you can sell one day at a higher price. Once you make your stock purchase, you can follow the stock's performance daily. You can find the average daily price of a share of your stock listed on the New York Stock Exchange, the Nasdaq, or other places. Just remember that there's no guarantee of profit with any investment: The stock market, the general term applied to all the different shares of stock traded each day, can go up or down, based on world and national events or fears about the future. |
