If you are interested in investing into the stock market, there are definitely some things you need to know before you start putting money into stocks. But before you do anything, you need to make sure you have money to lose if you are serious about investing money and time into the stock market. The more risks you take in this market, the more likely you are to lose money. If you expect significant returns on the money you put in during the first two years of being invested in stocks, you will probably be disappointed. Most stocks don’t rise by high percentages in short amounts of time, so you should be prepared to have your money in stocks for ten years or so if you really want a significant return on your money.
So, what is the stock market exactly? Well, on a basic level, it is an exchange market that deals with buyers and sellers. They act as the market for the shares in stocks, and the prices of the stocks are based on supply and demand. Supply and demand does not come directly from the buyer however. Traders are represented by brokers who makes the deals and does the exchanges for you. You also can’t just buy stocks whenever you feel like it. Certain stocks are open to trade from certain times, but depending on your broker, there could be pre and post market hour options to trade in.
Understanding the Stock Market
A stock market index is usually what people refer to when talking about the market being up or down. A market index is the overall performance of a group of stocks, not an individual company. Indexes represent either the entire market or a sector of the market, and depending on what kind of companies you want to invest in, could be set up either way. I’m sure you have heard of the Dow Jones industrial average, or DOW J. This is used as a sort of name for the performance of that total market. You can choose to invest in indexes or specific companies.
Whenever people talk about having gained lots of wealth through stocks, they have probably compiled a pretty significant portfolio of stocks. A portfolio of stocks is your collection of stocks in different companies, all compiled into one place. You never want to invest all of your money into one company, as one bad move from that company could wipe out all of your money that you have invested. For this reason, you will want to research all of the different stocks you can buy and spread your money out accordingly. You are much better off knowing that if one of your companies’ stocks tanks, you won’t feel that pain in any of the other companies you have invested in. Sometimes it may be wise to take your time after investing in a single company to invest in the next, and see what the market does before you make your next move.
Visit CNN.com to find out more information on current Stock Market trends.