Stock Market may seem like a complex and confusing world if you are a grown-up. More so for youngsters or students, who are just starting to make their first investments.
But guess what? It is actually a giant marketplace where companies and people can trade something called “shares”.
Think of it like a virtual bazaar, where organisations can sell small pieces of ownership in the form of shares to raise funds. Future investors like you can buy those shares one day in the hope that the company will do good and the prices of shares will go up.
Here is the cool part for the youth especially: If a company does well, this may drive a rise in the share price. That means if you bought a share at a low price and sold it at a higher price, you could make a profit! This is called “capital gain.”
But wait. There is more to it!
Sometimes, companies share their profits with their shareholders in the form of “dividends”. It is like a small bonus for keeping faith in them.
Now, the stock market is not just one type of organisation. Imagine you want to invest in real estate but don’t have the money. So, through the stock market, you will be able to buy shares of real estate companies. It's the same idea but a different and easier way to get involved.
Stock Market must-knows:
- It's regulated: So don’t need to worry about wrong deals. There are rules to ensure your safety and fairness.
- Many players: There are other forms of investment other than shares. For example, “Mutual Fund” or “ Exchange-Traded Fund (ETF)”. Experts will advise you to keep a mixed portfolio to keep your risks spread out.
- Do your research: Learn about different companies and markets as a whole and the risks that you might encounter.
Ready to play the game?
Before you dive in, here's a quick guide to get started:
- Open an account: It is like your entrance card to the market. These are of many types. So, choose your best fit.
- Find a broker. Consider them your mentor in the market maze. They will guide you through the buying and selling of investments.
- Fund your account: Just like any shopping trip, you need money to buy things. Deposit some cash to get started.
- Choose your investments: Do your research and choose companies or investment bundles that you trust. Remember, diversity is the key here.
- Buy and sell: Once you have chosen your investments, you can ask your broker to buy and sell them on your behalf.
Investing 101:
- Invest leftovers: The share market is not a quick scheme to earn profits. Invest only what you can afford. To be honest, the stock market is highly unpredictable.
- Be patient: You don’t hope to gain profit overnight. Trust your research skills and monitor the market's ups and downs.
- Don't follow the crowd: Everyone is buying a stock does not mean you too follow them. Do your own research and make informed decisions.
- Spread the risk: Don't put all your eggs in one basket! Diversify your portfolio across different types of investments to minimise risk.
Remember, the stock market can be complex, but with a little research, you'll be good at understanding how the stock market works!
