The world of investing is something that many people look upon as being extremely complex and involved. As a result, they think that serious investment is a domain best left for experienced professionals or those who have been playing various markets for many, many years. In addition, they might also believe that only the wealthy have the kind of financial potency to participate. Both of these generalities are somewhat misleading. First of all, it doesn’t take a fortune to become an investor, since there are many different ways to get involved and watch your money grow, even if you don’t have a lot of it at stake in the first place.
In addition, you can be a relative newcomer to investing and still gather enough information to make a wise choice with your money. Perhaps the best-known of all the investment avenues available to people is the stock market. Looking at the financial page of the newspaper and seeing all of those abbreviations and numbers are written so small you practically need a magnifying glass to see them can be intimidating. But knowing just a few basic terms and facts about the market is often all that’s required to make an informed decision. And what better time to start learning that during one’s schooling, perhaps at the high school or college level, so that there is more clarity once students are really ready to start spreading their money around.
For those looking to get involved in the somewhat complicated world of Foreign Exchange investing, a Forex demo is an excellent way to hone your strategy without putting real money up for grabs. If the stock market is your thing, there are just a few basics you need to learn to get started.
When you purchase a stock, you are essentially becoming one of many owners of the company underlying the stock. Each of those companies has fundamentals, which can range from quantitative factors like earnings, shares issued, and different statistical ratios, to qualitative, which rely more on unquantifiable judgment calls about factors like leadership and effectiveness of branding. The fundamentals are what you should study before making a decision whether or not to purchase stock.
Up or Down
When you purchase a stock, you do so in terms of shares. Those shares will be sold to you at a certain price, which is based on the market’s demand for that stock. Your goal as an investor is to buy those shares at one price and then have that price rise over a certain amount of time, thus making the stock more valuable than what you paid for it.
Hold or Sell
Once you have a stock, your basic options come down to either holding or selling. If you sell the stock, you will do so at the price that the market determines, which is hopefully a price much higher than what you pay for it. As you can hold on to it and hope that the value continues to rise in the future.
That is how the stock market works, in a very small nutshell. If students at least understand this foundation, they can build their market knowledge from there as they wish.