Learn the basics of the stock market before buying shares, and make your bucks work for you. Marvin Germo, a financial planner and advisor, and general manager of consulting company Ephesians Management Corp., outlines the basic knowledge anybody must have before venturing into the stock market.
Before making any investment in the stock market, you should know the playing field. Many newbies think that stock market investing is like playing a game of chance—either you get huge monetary gains or incur devastating losses. But the more you understand the stock market, the higher your chance of efficiently managing your investments.
The stock market is a venue where brokers buy and sell shares of ownership in a corporation (stocks) and other securities like debt agreements (bonds) or rights to ownership (derivatives).
Companies go to the stock market and sell part of their ownership if they want to raise capital without having to loan from banks and pay huge interest rates. On the other hand, investing your hard-earned money in company stocks gives you a chance to make your money work for you, literally. Compared to establishing your own business, investing in stocks means you no longer have to compete with business leaders. You are instead putting your money in a company whose business systems are already in place.
To transact business in the stock market, you need a broker. All transactions go through a broker. With the advent of online technology, however, buying stocks no longer means seeing the broker face to face. You can deal with online brokers like CitiSecOnline, BPI Trade, and First Metro Securities.