Investing in the stock market can be a heady proposition if you are not familiar with the basic terms that investors use to grow their assets. In fact, many would say that their aversion to investing in the stock market stems from the technical language associated with making these investments. In a sense, people will say it doesn’t take much for concepts to become too complex, it puts them off from giving it a shot.
The problem with this logic is that you are essentially taking yourself out of the equation by not even trying. And the truth is, believe it or not, it doesn’t take much to get acquainted with the most important terms and concepts that can help you succeed in stock market investing. If you want to give it a shot, investing in stocks and funds is one way to kickstart your exposure to the stock market.
Stocks. Stocks are publicly-traded assets which are indicative of the market perception of a specific company. Stock prices rise when investors perceive a company’s performance to be on the up-trend; conversely, stock prices go down when companies aren’t doing well. Most companies that we know – Apple, Facebook, Google, General Motors, and many others – are publicly traded and therefore have stock assets to their name that investors buy and sell on the stock market.
Success with investing in stocks rests on the idea of “buying low, selling high.” In short, you want to buy stocks at a low value and sell the same when the price has appreciated. Now, the stock prices can be relative – some stocks cost more than $500 per share while others cost a dollar per unit. Regardless, the goal is to buy low and sell high. In many cases, this requires waiting out for the stock to appreciate before eventually selling in order to recoup your investment and realize the profit.
Funds. Funds are slightly different than stocks because these are run by an investment manager. Investors pool their money together and authorize the fund manager to make investment decisions designed to grow the asset. The investment decisions made by the fund manager determine the behavior of the fund; it can be a low-risk fund if solely invested on bonds or high-risk if solely invested on stocks. Like stocks, however, you earn by buying low and selling high so it may also require a waiting-game before the fund value appreciates and you can liquidate at a profit.
Overall, investing in the stock market is not a difficult venture to undertake. Your initial splash may require a few readings and a modest learning curve but as long as you are committed to learn, you shouldn’t have problems. The stock market offers considerable opportunities for increasing your profit and it’s a shame if you step away from all of that just because you are afraid of the terminologies.