Make money with stock investing


Introduction to Stocks

Other than your job or career, the mostcommission.
important thing to you is your investments.
And, unless you own your own business, yourA full-service broker, much like a
investments are actually more important thanfull-service gas station, advises you on
your career. Job security is not guaranteed,which stocks to buy. Full service brokers are
and unless you want to work until you are 80financial advisors, they tell you what to do.
years old, you need to become familiar withHowever, full-service brokers don't always
the bare essentials of investing andprovide expert advice. Most of the advice
financial planning. Your investments are thethey provide is based on research done by
key to your future security. So, we willanalysts  who  work  for the brokerage house.
cover some basics about stocks to get you
started.A discount broker is someone who gives you
zero advice, and just executes your market
Stocks are also know as equities because aorders for you, but does nothing else.
share of stock is a certificate of ownershipTherefore, a discount broker usually doesn't
in a corporation. It is also a claim on thecollect commissions. Instead, they usually
earnings of the corporation. Companies paycharge a flat annual fee and are paid a
out a percentage of their earnings tosalary. Internet brokers such as Etrade or
shareholders  in  the  form  of  a  dividend.Ameritrade are discount brokers that work on
commission. They allow you to place your
There are two different types of stock:market orders online, and the website itself
common stock and preferred stock. Commonis the broker. Internet brokers usually
stock represents ownership in a corporation.charge a much smaller commission than anyone
Holders of this type of security exerciseelse.
control by electing a board of directors and
voting on company policy. Common stockholdersA full-service broker offers a wider array of
are on the bottom of the priority ladder forinvestment vehicles for you to put your money
ownership structure. In the event ofin, such as stocks, bonds, derivatives,
liquidation, common shareholders have rightsannuities, and some also sell life insurance.
to a company's assets only after bondholders,A discount broker, on the other hand, doesn't
preferred shareholders and other debtholdershave access to all these investment vehicles.
have been paid in full. Preferred stock hasA discount broker makes money by opening up a
a higher claim on the assets and earningslot of accounts and having a lot of
than common stock. Preferred stock has acustomers, but a full-service broker makes
dividend that must be paid out beforemoney by placing a lot of trades within your
dividends to common stockholders, butaccount, because they receive a commission on
preferred stock often has no voting rightseach  trade.
attached  to  it.
This is where you need to be careful.
Stocks trade on an exchange. The largestFull-service brokers make money every single
exchanges where the best stocks trade are thetime you place a trade. So, they have an
New York Stock Exchange, American Stockincentive to persuade you to place a lot of
Exchange, and the NASDAQ. Within antrades, because that's where they make their
exchange, there is the primary and secondarymoney. There are unscrupulous full-service
market. The primary market is for thebrokers out there who do provide sagacious
initial sale of shares in a company for theinvestment advice, but who are so active with
first time to the public, as with an IPO.your portfolio that their commissions start
The secondary market is for the trading ofto eat away at your earnings. Neophyte
shares  between  individual  investors.investors have unknowingly hired these sorts
of brokers, and when they get their annual
Now that you understand the basics, you needstatement they're shocked to find that they
to learn how to actually buy a stock. Whenmade a lot less than what they thought, and
you buy or sell a stock, you must place thein some cases actually got a negative return
order through a broker, who then transactson their investments. So, be careful when
your business by placing the order on theselecting  your  broker.
market. Stockbrokers are basically
salespeople. They work for brokerage houses.I hope this information has helped you to get
You've heard the names Merrill Lynch, Solomonacquainted with stocks. Try to set aside
Smith Barney, Goldman Sachs. Those aresome money for investing and start while you
brokerage houses. Brokers work at thoseare still young. The earlier you begin, the
companies. Some brokers are paid a straightmore money you can potentially make down the
salary, some are paid a commission, and someroad. Carefully research the companies you
receive a base salary in addition to theirare going to invest in and you will do fine.



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