Buying and selling stocks can give a huge profit but for beginners, it is quite difficult to understand and work on. Some common questions that come into newbie’s mind are where to buy the shares, where to trade them, and most important what is a stock? Here on munchkinpress, we will share an ultimate guide that will help beginners to understand shares and in hope of investing and getting profit out of trading.
What you will get from this guide is:
- What is the stock?
- How to start with stocks?
- Where can I buy the stocks from?
- Which shares should I start with?
1. What is Stock?
A share is an ownership interest in any company that does not only depend on how the company’s things go but also on how many people are selling and buying the shares of that company. For example, if too many people are selling their shares then the value of that company’s share will decrease. On the other hand, if people are buying shares more than the value of the company’s share will increase as the demand increases.
Let’s take one more example for beginners to understand the stock is if 1 million shares are present in a company, then there are 1 million ownership of that company. There are many easy ways to buy stocks of any company and the easiest way is to go with the Stockholm Stock Exchange. All of the companies listed on this stock exchange share the public information in the form of annual reports that will help you to understand how well the company is going.
2. How to Start with Stocks?
To get started with shares as beginners, you must have the capital to spare which means the saved money that you don’t need right now or within a few years. The time is very important in shares buying so we recommend you to invest only those saved money that you will not need for 5 years to 10 years.
The main reason behind this is the stock market and shares go up and down in value, but for the past few years, it is growing most of the time. That is the reason why investing in shares is a good choice if you have spare money. Trading is the game of patience and long-term investment horizon so if you are a beginner, you must have patience.
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As a beginner, you should also keep in mind that stocks can fall too that can risk your money so we recommend you to start with small savings and then after you gain experience, go with large savings. Another way to carefully invest is first to invest a small amount in shares and then month to month invest small amounts and grow your investment if you feel safe.
3. Where Can I Buy The Stocks From?
Buying shares is easy as you can most banks offer this service. However, we recommend you to use an online broker or stockbroker. Why we are suggesting this is because stockbrokers have a good range of shares and mutual funds and also have innovative savings services and products. We don’t recommend banks because they charge higher fees than any online broker. In the Swedish market, you can go with Avanza and Nordnet as they are the best and have the largest number of customers. They also help beginners to understand where to trade and when you should trade. Another good thing about them is you can use their customer’s app that will offer you to sell or buy shares through your mobile directly.
4. Which Shares Should I Start With?
This is the tricky part in which share a beginner should start. If this question was that easy to understand then every saver would be a billionaire now. Unfortunately, it is not that easy. To save handsome money on any stock, you must be a good learner and you must have some information on it. The best part to start with is to look at the company’s financial figures.
It looks very easy to get into trading and invest in stocks that are already rising and you think it will continue to rise, but it may not be the case you are thinking of. The stock might rise to its ceiling point and can continue to rise and can also fall down very quickly. Another thing that beginners do is to invest in stocks at that is at a low price and consider it to grow in the future and that may not happen so every person must have some information to get started with shares trading. Some tips for beginners to start with trading:
- Get started with a small number of stocks
- Treat your shares as an investment, not a lottery
- Analyze the companies profiles
- Learn, learn, and learn before investment
Advantages of Shares
- You make money if the company makes a profit like you will get money on every product or service they sell.
- As the company grows and sells more products, its share value will automatically increase which means your share value will also increase. You can then sell your share at a higher price.
- Each share you buy will give you more power to influence the company.
Disadvantages of Shares
- If the company gets the loss, you will also face the loss.
- If a company makes less profit, its share value will not increase and can go down which will also decrease your share value.
- A company if gets bankrupt, all of your investment will lose.
- Trading in stocks is very addictive so be careful while investing all your money in it.