Investment Terms For Dummies

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Stock Markets For Dummies - A Beginner's Introduction to Stock Markets

Whether you want a quick re-cap of the facts of stock markets or a beginner's primer, this article gives you a basic understanding of stock market for dummies. There are many reasons you might be interested in learning about the stock market from a beginner’s perspective. You might want a quick and dirty low-down on what stock markets are and how they can earn you money. You might be confused about all the stock market investing jargon out there and want someone to clear it all up for you. You might want to learn about the stock market but haven’t a clue where to begin. Whatever your reason, you’re on the right track in wanting to learn how the stock market works because it is one of the surest ways of multiplying your money. Here is the most basic stuff about stock market investing that you need to know to get started (think of this as stock market for dummies): What is the Stock Market? A stock market is essentially like any other market: a place to buy and sell something, which in this case are stocks. Stocks are instruments of ownership in a company. In other words, owning stock in a corporation means you own a part of that organization. Owning stock also generally gives you the right to vote on important decisions in that company. How Does a Stock Market Work? A stock market works on the same economic principles of supply and demand that any other market works on. When demand is high and supply is limited, the price of stocks goes up; and when demand is low and stocks are aplenty, it drives down the price of stocks. The price of a stock is an important indicator of a company’s viability: if the stock price goes up consistently over a long period of time (a year or two), then the stock is generally deemed a good investment. What are the Financial Benefits of Stock Market Investing? Most people invest for two reasons: to maintain their wealth or to increase their wealth. If you’re like most people, you fall in the latter category because you want to make money by investing in stock. The way to earn an income from stocks is through dividends. Companies pay out dividends to its stock holders as a way of thanking them for investing in the company. Dividends are a percentage of the profit that the company has earned. Since you are a part-owner of the company (through your stock investment), you are entitled to a part of the earnings. Your dividend amount generally represents the value of stock you hold in the company. How Soon Can I Make Money with Stocks? Stock market investing is a long-term game plan so be ready to have a long term investment strategy. Short term investing (anything less than a year) is called “speculating” and is considered risky. Long term investing is better because stocks tend to fluctuate (sometimes wildly) on a daily basis but become stable over time and it is generally easier to spot (and utilize data from) stock market trends over the long term. What are Stock Market Trends? If you’ve ever watched financial news and analysis you’d have heard of the bull market and the bear market. Essentially the stock market is called bullish when the economy is looking good and more people are buying stock than selling it. The stock market is called bearish when more stock selling than buying is going on and the economic outlook is looking towards a downturn or perhaps even a recession. Since stock market trends gradually become apparent over time it is useful to analyze past market data combined with future economic outlooks to predict which direction the stock market will take. Understanding when a bull or bear market is about to hit is the key to understanding when to get in or out of the stock market. Doing your market research is vital to understanding how the stock market functions. And once you understand how it functions, making money from stock investing can be a great way to generate income for the years to come. So whether you want to save up for retirement, set up an income stream or become a major player in the stock market, remember to follow the advice given here to understanding the stock market. If you’re a beginner, start by reading up as much as you can on stock market for dummies.
About the Author

Kelly Clifford from StockMarketsMadeSimple.com has put together a complimentary report titled "Stock Market Basics: A Beginners Guide To Understanding The Stock Market" that will likely prove invaluable in putting you on the fast track to becoming a knowledgable and successful Stock Market investor. To download your copy now instantly.. visit http://www.stockmarketsmadesimple.com/index.php

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