What is a stock? How can I start investing? What should one know before investing?

in #stock8 years ago

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Owning a stock is basically owning a part of a company. As an owner, you are also entitled to a share of the companies profits, sometimes given out as dividends.
To buy a stock you need to purchase it through a broker. It's rather easy today, and you can ask your bank to do it for you or sign-up at one of many online brokers such as DriveWealth.
Most people don't have the time and knowledge to know which stocks are the best to buy at any given moment. Therefore, the average person would gain the most from buying a index-based ETF - that is, buying a way to track the overall stock market. This way, you gain from the overall growth in the economy, without being tied to any one specific company.

The most common lines of investment for everyday people is a portfolio of stocks and bonds.

Owning a bond is basically owning a debt. When a country or company issue a bond, they are taking a loan to be repaid over time.
Bonds can be purchased through a broker, the same way stocks are - and there are bond indices you can follow just like with stocks.

Now there's the matter of risk. In the financial world, generally (and with remarkably few exceptions) interest=risk. The more interest you expect to gain, the greater the risk you are taking.
How much risk are you capable of taking?
As a rule of thumb, the more you are invested in stocks, the greater the risk.

This is a rather large topic, and you would probably want to explore it more on your own. I hope this gives you at least a basic head start for this exploration.

Disclaimer: I'm not a financial expert, and non of my answer should be considered a financial advice of any sort. Please consult a professional before making any large financial decisions.

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