You have worked hard to eliminate debt, contributed to savings, and invested in your retirement plan. Now, you feel that you would like a larger return on some of your money. One way that you can increase your portfolio is by investing in stocks. The stock market offers several options for investing in stocks. You can invest locally, nationally or globally.
What is a stock?
A stock is a share of a company offered for sale to investors. The revenue that the company generates from these shares fuels expansion and increases available operating capital. When the company uses this money to produce more or increase their services, the company may post a profit. With increased profits, there may be increased values to the shares sold to investors.
How Can You Begin Investing in Stocks?
You can begin investing in stocks in one of two ways: through a stock broker or through a brokerage account. When you use a stock broker, this financial representative can work in several different capacities for you:
1.Discretionary – the broker has all say over your money when investing in stocks. He can buy or sell shares as needed. You will be contacted for updates concerning your portfolio.
2.Execution – in this instance, you will let your broker know when to buy or sell shares that you choose. The broker offers no advice in this instance and simply completes your transactions.
3.Consultant – your broker can offer his expertise in investing in stocks. He can give advice on why a stock may or may not be a good choice as your investment.
Another increasing popular medium of investing in stocks is the online brokerage account. For a minimum opening balance, often as low as five-hundred dollars, you can open a brokerage account that you control. Many of these online brokerage accounts have helpful articles to aid you when investing in stocks. These online sites are often provided with much data available for research. One reason that they are gaining in popularity is that they have lower fees compared to brokers. One thing that you lose is the financial advice of a consultant broker.
How Much Money Will You Need?
If you decide to go with a broker, this will depend on the brokerage firm. Should you choose the route of an online brokerage account, you can often find them as low as five-hundred dollars to start. One popular online brokerage option is share-building. You can contribute a certain amount until you have accrued enough money to purchase shares. Once a single share is completely purchased, you begin to reap the rewards of ownership. The nice thing about a share-building program is that the initial outlay of money is much less.
Research the different options that are available for you before you begin investing in stocks. Each investment plan has advantages and disadvantages. Talk with anyone that you know that is involved in the stock market. Figure out the best option for you and your money before you decide on investing in stocks.