Saturday, April 11, 2009

Stocks Basics 202: What does Investing on Stocks mean?

By Mara Hernandez-Capili

Investing on stocks will make your money work for you or in other words- your money will increase without you doing anything. In this way, you can focus on building your other assets and earning other forms of income. This article is to equip you with the knowledge on the basics of stocks investing.

What does investing on stocks means and how is it different from investing your money in the bank? Investing on stocks is when you buy a share from a publicly listed company. You are then considered as a part-owner and may enjoy exclusive company privileges such as voting rights. Your money will increase in percentage as the company enjoys higher profits at a given time. It also does not guarantee you with earnings since the company may also experience losses that will also affect your stock.

Investing on stocks is different from investing your cash at the bank because of several things, first is because: banks have taxes payment and little annual percentage returns and is affected by the market inflation. The argument is always on this presentation: banks to maximum security but lower to no returns, stocks to greater risks but higher percentage returns. There is little to no risk of losing your money that is invested in a bank.

Investing in stocks left some people think twice about it since you allow your investment to operate on involved risks. If youre a just starting and would like to try your hand at stocks, it is advisable for you to start investing with an amount you are most comfortable in losing (if ever it happens). It is advisable to play it safe first especially if youre a beginner and practice on investing with a capital where you are most comfortable with.

Whether you have plans on investing in stocks now is the right time to do so when you are still young and have a lot of time to recover in case you lost.

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