One of the biggest problems with the standard working income is that it’s only ever temporary. You might work right up to the top of your career ladder, and earn what you believe to be good money, only to face unexpected redundancy and realise you only have what’s in your savings to see you through the job hunting period. It’s not a wise idea to rely on one source of income alone, which is why an increasing number of people are considering investing.
There are many different forms of investing, and out of all of them, investing in the stock market gives you the biggest chance of good returns – but also the biggest risk of a substantial loss. If you think you may want to start investing in stocks, here’s what you need to know:
What is the stock market?
The easiest way to think of the stock market is as a sort of online market where things are bought and sold. In this case, the things being bought and sold aren’t physical as such, but are invisible slices, known as shares, of much larger companies, known as stocks. If you own shares of a company or companies, you own parts of that company or companies. You can find more information about the stock market on LetMeBank.
A lot of companies will offer out shares as a way of funding business. It has its advantages over alternatives like bank loans, because once a share is paid for by the investor, the investor’s money belongs to the company. This means that the company technically never has to repay the money, which is why shares can be a risk if the stock market falls.
How do you invest in stocks?
If you want to invest in stocks, there are a number of different ways to go about it. The stock market is all online nowadays, so it’ll help to open an investing account. You could open a securities account, which is great for if you want to handle all your investments yourself. Alternatively, you could opt for a robo-advisor account, which can pick your individual investments for you.
What factors can cause share factors to rise or fall?
It’s hard, almost impossible, to predict when a stock’s share prices might rise or fall, but it helps to understand some of the reasons behind why they might do so. You can generally expect shares to rise if a company is undertaking a major new project or has a big new product. They may also increase if the company has a new director, or the stock market overall is rising. On the other hand, shares may fall if a company faces bad publicity, the stock market is dropping, or something has resulted in the company having to increase costs or operate differently.
How do I get started in investing?
Before you jump into investing, you should be certain that you’ve got enough knowledge to give it a good go. Seek the help of a financial advisor or an accountant if you want specific advice on how exactly you should be investing your money.