The word stock and stock market can usually be acquainted with large-scale businesses all over the world. This is mainly how the business grows besides from the products and services that they offer. An equity stock, or more commonly known as a stock or a share, is an individual's portion or ownership in a corporation. This individual is called a stockholder or a shareholder and can either be a single person or a whole company represented by a single person. Stock market is a public place for the trade of equity stocks and derivatives at a price agreed upon by the seller and the buyer. The seller is the owner of the stocks while the buyer is the individual negotiating for the stock with the intention of buying the stock and becoming a stockholder or part-owner of the seller-company.
Each stockholder is given a written certificate of the amount of stock or money that he/she has invested with the company. Once a year or once every quarter depending on the policies of the company, dividends representing the stocks are distributed to stockholders. These dividends are derived from the gross income of the company and are not considered as expenses but rather as a return to the stockholders of their investments. The amount of dividend will of course depend on the number of stocks owned but the priority of the distribution will depend on the type of stock purchased.
There is really no definite time and period to start investing in stocks. It all depends on the situation and the budget of the investor. The first thing that an investor should take into consideration is research. The internet is the best source of getting company information and how they are doing in the stock market. Once you have created a list of good investment prospects, weigh your options, check your budget and consider the following investment to avoid tips before entrusting your hard-earned cash to another party:
* Always check the financial statements of the company you wish to invest in, especially its history of liquidity and distribution of dividends. When you invest in stocks, it's like playing a game of poker with professionals. Remember that they are already masters of the trade; therefore, you need to be really wise and prepared. It always pays to do your assignment beforehand.
* When seeking the advice of stock brokers, be wary for those who try to charge you with upfront fees for these charges are usually for advertising expenses or their commission. There are good investments that do not require upfront fees so keep your eyes wide open and your pockets intact.
* Be wary for fraud and stock manipulation. It is best to have the basic knowledge regarding financial ratios, as these computations will help you all throughout your stock market career. They will be responsible for determining which stock is really cheap and which can be considered a good investment. There are websites who offer online courses about financial ratios. Try to check them out or go to the nearest library or school.