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Many of us are involved in the stock market, sometimes
indirectly. If you participate in a 401k or mutual fund,
you are investing in stocks through a corporation.
Investing in the stock market is mysterious to most of us.
We hear that there is plenty of money to be made, but how?
The stock market may be a bit intimidating. This is due
in part to the fact that experts use a language we've
never heard. Some of the key terms are defined below:
STOCK - Well this is a pretty basic one. A "stock" is a
small piece of ownership in the company. If you buy
one stock in a company, you own one SHARE. Stocks are
usually sold in standard sized groups like 100 or 1000 and
those are called LOTS. If you own shares of stock in a
company, that makes you are a SHAREHOLDER.
DIVIDEND - A portion of the profits of a company that is
distributed to shareholders (investors)
COMMON STOCK - This is the type of stock that is traded on
the popular stock exchanges. It may gain dividends and
gives an owner the right to vote in corporate matters.
PREFERRED STOCK - This type of stock is given to investors
in a company. They don't carry the ability to vote in
meetings pertaining to the company, but do get a share in
the profits.
OPTIONS - These are agreements that you have an OPTION to
buy a stock at a given price for a limited time. These
have value and are traded.
MUTUAL FUNDS - This is an investment service that invests
your money along with other investors together and manages
the stocks, bonds, and securities you purchase for a small
fee. In this way, you don't have to keep up on the hundreds
or thousands of stocks rising and falling. The fund
managers have experts to do that for you and they benefit
when you make money so it's a good partnership.
BONDS - A bond is money lent for a specific purpose, like
an improvement to a building. Bonds are paid back steadily
and at a fixed rate, so they are low-risk.
FUTURES - A contract to buy or sell a particular commodity
or investment vehicle at a specific price.
COMMODITIES - A raw material, often agricultural, that is
traded openly.
These are, of course, just a primer in stock trading. For
further learning, read some books or contact a stock
professional. This can be an exciting venture, but is also
risky.
James Femling is a common man's investor. He owns and
manages Fem Stock,
a helpful investing site covering stocks, bonds, options,
mutual funds and more.
http://www.FemStock.com/
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Source: www.contentarticles.net
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