Stocks (also known as equities) are investments that allow you to own a share of a company. They can help you build wealth over time and provide a way to grow your portfolio. But stocks have many different names and aren’t always easy to understand. Investing in stocks can be a great way to grow your money, but it’s important to know what they are before you buy.
Stock Market Definitions
Stock prices fluctuate based on a number of factors. They can rise or fall quickly depending on whether investors expect the company to perform well. They also change if investors think the company is headed for financial difficulty or is about to go out of business.
Companies often issue shares as a way to raise money for growth, new products, and more. When they go public, these companies make their shares available for trading on a stock exchange.
Buying and Selling Stocks
When you want to buy or sell stock, you place an order with your broker. This lets your broker know how many shares you want to purchase, and at what price.
Some orders are instant, while others take a little more time to process. It’s important to remember that the prices of shares can change a lot over short periods of time, so you should always check back on your orders periodically.
Historical Returns and Taxes
Historically, stocks have produced higher returns than other assets such as bonds and cash alternatives. For example, an investment of $1,000 in large domestic stocks 30 years ago would be worth more than $8,000 today.
They’re easy to diversify and pay dividends, which can give you a regular income stream.
The best part is that they offer long-term potential for growth (capital appreciation). If you’re willing to hold on to them for a while, you can expect to see a significant increase in your money.
How to Get Started with Stocks
If you’re new to investing, the first step is to open a brokerage account and start looking at the stocks that interest you. This can be done online or in person.
Once you’ve chosen a few stocks to buy, it’s important to understand how they work. You need to consider their history, their management team, and their prospects for future growth.
You’ll need to determine if you’re willing to take on the risk of losing money, or if you prefer to earn a guaranteed return. Typically, you’ll choose the former option.
Depending on the type of stock, you’ll receive the right to vote at shareholder meetings, receive dividends, and even get your money back if the company fails.
There are a variety of different types of stocks, including blue chip, class A, and B, which indicate voting rights and ownership control. Other kinds of stocks include small-cap, mid-cap, and large-cap, which indicate the size of a company.
It’s a good idea to discuss your goals with your Edward Jones advisor to find out which stocks may be the best fit for you. We can help you build a diversified portfolio that will give you the greatest opportunity for growth.