By Ray Timus
Stock investing can be fun, but it can also be challenging, and it is important for you to get familiar with the main concepts, otherwise this can mix up in your head.
To put things clear in the first place, stocks are paper assets that companies issue when they want to raise money from the investors. Everytime you buy a stock, you actually own a part of that company, so it is important to know how that company is doing.
Key info you need to know before you invest in a stock or in a portfolio of stocks: * When a company sells stocks on the market, they must be issued on a stock exchange, following some transparency rules, and those stocks must have a ticker symbol. This is the short version of the company’s name, and you might find some investors know that company by its ticker: Google has GOOG, McDonald’s has MCD, Coca Cola has KO. * In the financial world, stocks issued by stable and well-known companies are called “blue chips”. Investors feel more safe to put their money in these kind of stocks, and consider these to be the best. Usually, blue chip stocks pay dividends. In US, some blue chips you can invest in are Microsoft, Apple, Procter and Gamble, Coca Cola and many other more.
What are dividends?
* When a company makes consistent profits quarter after quarter, or year after year, the managers can decide to distribute dividends to investors, so you can receive regular inflows on your investment. The logic is similar to receiving a rent from a property investment.
* Blue chips are the big stocks, but there are also penny stocks, that is stocks that have a low price. They usually trade below $5 a share, and tend to be more risky. They usually don’t pay dividends, because they belong to companies that are not having a mature position in their market, or some of them might have financial problems.
So when you buy a stock, do this properly. Start with blue chip stocks, those companies that you hear a lot of news about, and then see how things are going forward. Step by step you can go into more detail and buy more stocks as long as you see the whole process.
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About the Author
Expert in Forex trading and stocks, having my own company in this field since 2006.
