We have been hearing so much about investment and the reason why we need to get into proper investment this period, but to some of us we are stranded between the opportunities of choosing the right investment pattern.
According to Wikipedia, to invest is to allocate money in the expectation of some benefit in the future.
It is relevant to exhibit the habit of investment but not every investment yields profit, it is important to only invest towards what will produce better returns for us, stock market is one way to make appropriate investment options. I will try to explain the basics for those who might be interested in stock market.
First of all, investment in stock market requires that it is done through a broker, this broker will in turn carry out your trading for you, but brokers are of different types and it is good to go through a licensed broker.
Investopedia defined a stockbroker as a professional who executes buy and sell orders for stocks and other securities on behalf of clients.
Common Terminologies used in Stock Exchange System.
There are certain terminologies that are used in the stock exchange market and for people who are interested in stock exchange system, it is important to get conversant with this terminologies.
The terminology earning per share is used when the company’s overall profit is divided by the number of outstanding stock shares.
The terminology going public is used when a company decides to have an IPO.
The terminology IPO, simply earns Initial Public Offering and this terminology is often used when the shares of a company is sold by the company for the very first time.
The terminology market capitalization is used to calculate the amount a person has to pay if he decides to buy every available shares in the company during the IPO.
The terminology shares is often used when a company decides to sell out some part of the company in exchange for cash and more investors.
During the process of IPO, the paper work is usually left in charge of either a financial institution or an investment bank, these institutions are termed as an underwriter.
Now that we have obtained knowledge on the frequent terminologies used, we will go straight into understanding the idea of how stock marketing came to be.
The Need for Stock Market.
There are people who have amazing business ideas but usually do not have the financial resources or expertise to run the business. Rather than trashing their idea, they try to look for people who are ready to buy into the business in exchange for an agreed percentage of the company. Some companies on the other hand have grown their business to an extent and they need investors who will contribute to the growth and make it extend its tentacles.
Picking the Right Stock to Purchase.
There are so many business ideas and business owners out there who want to sell their shares, now as an investor you have to be very careful and ensure you are making the right pick out of the majority of stocks available.
Before investing into stock, carry out an underground check on the company that wants to sell stock, it should be an idea that would sell, if you buy a stock from a failing company, you are sure to lose your money.
Select a company that you are particularly interested in and talk to a certified stock broker.
