What are Shares?
Shares are pieces of a company that you can buy to trade or hold.
Investing in shares will make you part-owner of a business. Stokes can be a sound long-term investment but are very risky to use in the hope of making a quick buck.(Trading)
Shares may also be referred to as stocks, securities or equities.
Why people invest in shares?
The stoke market could be a really good investment if you do a good research of the company that you what to be part off.
Investing in stokes can be risky and at the same time very profitable.
Some companies pay dividends to the share holders.
For example: The company Altria pays around $3.40 per share every year. So if you have 100 stokes of Altria symbol (MO) you will get paid $340 (100 stokes x $3.40) per year, only because you are a shareholder.
Benefits of investing in shares:
- Passive income
- Potential capital gains, when you decide to sell your shares.
The most successful share investor is Warren Buffett, please listen to what he said about investing in the video below.
Risks of investing in shares
Investing in shares is one of the most risky investments, Why:
- The company could go to bankruptcy (zero value)
- The price of the shares could drop dramatically in a Bear market (recession).
- The company could stop paying dividends by a management decision.
Buying and selling shares
Trading ( Buying and Selling ) shares, is a very high risky strategy.
The most common way to buy and sell shares is on the share market using a broker or broking service.
On the other hand, if you are a beginner in the stock market, I wouldn’t advice you to start trading and why:
- Reading financials charts is difficult to understand in one day or in one year.
- The market can be sometimes very volatile.
- Technical Analysis is a really good skill to know before start trading but at the same time is not one thing that you learn in one day.
How to trade DAY TRADE for a living, is the book that you should read before thinking on start trading the Share Market, click in the book below and get your copy on amazon.
Choosing shares to buy and sell requires time, research and analysis.
However, if you’re willing to put in the time and keep an eye on the market and economy, building a portfolio of shares can be rewarding.
As a starting point, it’s important to educate yourself about how economic and market changes can impact a company’s earnings.
The more reliable the information you have, the better your decisions will be.
Here are some places where you can get information about market changes:
- The business section of reputable websites, magazines and newspapers for new economic information
- The research department of banks and stockbrokers for forecasts about economic conditions
Topics to keep up-to-date with include:
- Interest rates
- Government policy
- Exchange rates
- Investor sentiment
- Overseas economies and markets relevant to the business
Blue chip companies
If you are going to choose your own shares, a good place to start is with the top 100, a list of top 100 companies, commonly known as ‘blue chip’ companies.
Blue chip companies tend to be long established, stable companies that suit investors looking for steady returns with less risk.
The value of your investment depends on the health of the business so it’s important to research and compare before you invest.
I hope this post help you to understand what are shares and what that can bring to your life and the risk of the share market.
Please have a look to my Library I have some good book that can help you a lot if you are a beginner.