Why Investing in Stocks is Good
Stocks offer investors the greatest potential for growth and positive returns over long periods of time. But stock prices move down as well as up. There’s no guarantee that the company whose stock you hold will grow and do well, so you can lose money you invest in stocks.
Types of stocks
There are two main types of stocks, common shares and preferred shares. Common shares entitles owners to vote at shareholder meetings and receive dividends.
Preferred stockholders usually don’t have voting rights but they receive dividend payments before common stockholders do, and have priority over common stockholders if the company goes bankrupt and its assets are liquidated.
Benefits of Common Shares
Common shares can offer investors the following benefits:
Benefits of Preferred Shares
Preferred shares can offer investors the following benefits:
Benefits of Dividends
Dividends are a way for companies to distribute a portion of their profits to shareholders. They are often paid in cash on a quarterly basis.
Not all companies pay dividends and some companies that are still growing may choose to reinvest profits back into the business to help grow it.
Why companies issue stock
Companies issue stocks to get money for:
Why investors buy stocks
Investors buy stocks for various reasons:
How to invest in stocks
Investing in stocks means buying shares of ownership in a public company. That means you could earn a profit if you decide to sell them. Investing in the stock market is a long game.
A good rule of thumb is to have a diversified investment portfolio and stay invested, even when the market has ups and downs.
Best stocks for beginners
The process of picking stocks can be overwhelming for beginners. There are thousands of stocks listed on the major U.S. exchanges.
Benefits of Investing In Stocks
Build. Long-term equity returns have been better than returns from cash or fixed-income investments such as bonds.
Investors may want to consider a long-term perspective for their stock portfolio because stock-market fluctuations tend to smooth out over longer periods of time.
Disadvantages of Investing in Stocks
Risk: You could lose your entire investment. If a company does poorly, investors sell, sending the stock price plummeting.
When you sell, you will lose your initial investment. If you can't afford to lose your initial investment, buy bonds.
Ways you can diversify your stock investments
By investment type: A well-diversified portfolio will provide most of the benefits and fewer disadvantages than stock ownership.
Have a mix of stocks, bonds, and commodities. Over time, it's the best way to gain the highest return at the lowest risk.
When to Buy and Sell a Stock
When are you supposed to actually go in and buy shares so that you have a good chance of making money from those stocks?
How does being a long-term investor build returns?
A key to building high stock market returns is to let your portfolio weather periods of price drops due to economic events that are bound to happen over time.