New and seasoned investors look at the stock market as a good way to grow long-term wealth. When an investor buys shares in a particular company, they own just a small piece of that company.
Shareholders become part of the company, and as the company grows and rises on the stock market, so does your share in the profits rise.
Buying Shares is Advantageous for a Company
The question is always – ‘why would a company want to share their profits with others’? Companies need to raise money and they do this by selling part of the company – stocks. Issuing stock is known as equity financing and its advantageous for the company because it doesn’t require the company to pay back money.
Turn Impossibilities into Possibilities
Of course, making the right choices in terms of what companies are worth watching this 2017 can be impossible for the new trader. A reputable online trading broker becomes critical, particularly because there are also important differences that exist in the services they offer.
Always choose reputable, regulated broker who can be trusted. CMC Markets offers the full range of investment products, they offer an award-winning trading platform, advanced trading tools, access to international stock exchanges, excellent banking services and cool resources to guide novice traders. They can be a minefield of information with regards to selecting well-established companies.
Help with Understanding Shares
Holding shares in just one company is risky, lest the company get into difficulties. Rather spread your risk by diversifying and buying shares in different companies. The shares of smaller companies are often referred to as penny shares and these are bought and sold on other markets such as the Alternative Investment Market (AIM).
As a new investor, you need a good broker to answer your questions and help you make wise decisions –
- how do you invest in stock from successful companies who are consistently generating cash? These are the stocks that will attract investors based on the potential they show. You’ll want to be looking at companies with good staff, good customers, good operating ethics, good products and good streams of revenue.
- how do you find out what the company makes, how they sell it and who their competitors are? A good stock simply belongs to companies that makes money, and are known as success stories.
- how do you actually go about looking at a company’s financial reports to learn about their financial health? How will you know how much debt the company has? How do you actually check the company’s balance sheet? It’s all very well buying stocks from a good company but its also important to know when to sell.
- how do you avoid selling out of panic with short-term movements in the market?
- should you buy individual stocks or a low-cost mutual fund? An individual stock is more volatile than a diversified mutual fund. With the risk of an individual stock however, there’s that potential for greater returns, so how do you know what to do?
Take advantage of the services offered by a good brokerage. They will guide you on simply understanding investments like stocks and how to make your first investment after you’ve set up an account.
Good stocks are available to you with the right broker. There’s no shortcut to wealth, but a good broker can help you understand how a Trump administration can affect the stock market, you’ll hear about penny stocks and what a stock bubble is.
Once you understand all the basics of the stock market as well as the risks involved, you discover how to pick stock and stock pricing. Before picking the right stock, analysis is required, of which there are 2 types – Fundamental- and Technical Analysis.
Fundamental analysis is looking at the actual company, the analysis of a stock. Technical analysis looks at stock charts and is the study of prices and forecasting future stock prices.
Reputable Brokers – the Simplest Solution
As a new investor you can spend a lot of time wondering how to choose stocks, so much so that you never get started. Many wise investors simply take the advice of seasoned, legitimate brokers and start a new year of investing on the right foot.