Finance
How to Make Money From Investing in Stocks ?
Find out how best to buy stocks and Money Girl explain the best strategy make them really pay off.
“I really don’t understand stocks or how investors make money with them. What should I know as a beginning investor?”
I’ll take about stocks so you understand their pros and cons. You’ll find out the best ways to buy stock and get a smart investing strategy.
How to Make Money Investing in Stocks
One of the best ways to invest money is to purchase assets that either create income, increase in value, or do both.
they’ll be worth more in the future so you can sell them for a profit.
Investments that offer the potential for both income and price appreciation include:
- Rental property
- Businesses
- Stock
What Are Stocks?
why do companies issue stock in the first place?
Companies issue stock to raise money from investors Maybe a company needs to fund groundbreaking research, open a division in a foreign country, or hire a crew of talented engineers.
Stocks are intangible assets that give you ownership in a company. That’s why they’re also known as equities or equity investments.
stocks can increase in value, which is called capital appreciation. As I’m writing this episode, Facebook (FB) and Apple (AAPL) stock can be purchased on the NASDAQ exchange for $59.83 and $593.76 per share respectively. Walt Disney (DIS) stock is selling on the New York Stock Exchange for $15.03.
So, if you buy Walt Disney at $15.03 per share and the price goes up to $30, you can sell it for a gain of $14.79 ($30 – $15.03). You can easily find current stock price quotes on sites like Google Finance and Yahoo Finance.
In addition to capital appreciation, some stocks also allow you to be paid a portion of company profits. That’s called a dividend stock
Dividend stocks pay you even when the share price goes down, so owning them is a smart way to hedge against potential market losses. You can find a list of dividend stocks on a site like Morningstar.com.
Pros and Cons of Investing in Stocks
There are many advantages to investing in stocks. One is that you don’t need much money to buy them, like you do for other assets like real estate or businesses. Buying just one share makes you an instant business owner .
Although there’s no guarantee that every stock will increase in value,
since 1926, the average large stock has returned close to 10% a year.
The biggest advantage of stocks is that they offer the greatest potential for growth. Although there’s no guarantee that every stock .
If you’re investing for a long-term goal like retirement, stocks turbo charge your portfolio and give you the growth you’ll need to achieve it.
The major disadvantage to investing in stocks is that prices can be volatile and spike up or plummet quickly as trading volume fluctuates. News, earnings forecasts, and quarterly financial statements are just a few triggers that cause investors to buy or sell shares, and that activity influences a stock’s price.
Price volatility is why stocks are one of the riskiest investments to own in the short term. Investing at the wrong time could wipe out your portfolio or cause you to lose money .
