Stock 101
Stock’s are essentially shares of a company that you can buy, which means you own a percentage of it. This means, in basic terms, whenever the company succeeds, you succeed. There are several types of stocks you can buy, and several ways you can buy the same stock. In this article, I’ll show you the stocks you’ll need to understand before beginning to invest.
Types of Stocks
Here are the types of stocks you can invest in:
Common Stock: Ordinary shares invested in a company, with a percentage in the company. Shareholders (you) usually get paid benefits (dividends) for investing in the company, with yields varying from .2% to as high as 5% per quarter.
Preferred Stock: Same as common stocks, but with faster dividend payments (benefits). Will also receive reimbursement payments if the company goes bankrupt first.
Growth Stocks: When the economy is doing well, these stocks do well. They grow faster when the market is booming.
Value Stocks: When the economy is doing badly or discounted from it’s previous values, these stocks do well. They grow faster when the market is spiraling downwards.
Income Stocks: Stocks with high dividend payments that act as a form of income, with less volatility (prone to risk) and reliable cashflow. Great for investors seeking to make a reliable stream of money without high risk high reward.
Blue Chip Stocks: The cream of the crop, best companies with solid reputations and large markets. Due to this, investments in blue chip stocks tend to return solid returns with little risk, however with little room for massive improvement.
While there are other types of stocks, as a beginning investor, these are the types you should be most careful about and research the most
How to Invest
Investing in stocks is very simple, but it’s important to know you’re on a safe and non-predatory site. For simple investing, I’d go with the following:
Robinhood: A good beginner option, so long as you stick to stocks and stocks alone. Options trading, margin, and crypto are far too complex at this stage, and should only be invested in with a plethora of free time and research.
Fidelity: Strong customer service, 0$ commissions, good research, and 0 fee index funds are valuable beyond belief. Also far more useful for long term.
What to Invest In
Now you know how to invest in stocks, what types of stocks there are, and where to find them. Now, let’s review what you should be investing in:
Blue Chip Stocks and Index Funds: Index funds (Large collections of the best blue chip or regular stocks) and blue chip stocks are often called “safe bets” by many long time traders, but don’t let that fool you. The S&P500 returned nearly 30% return just last year, while many blue chip stocks, like NVIDIA, returned 50-150%.
Heavily Researched Stocks:
Stocks with available and recent financial reports, well above predicted earnings with a high P/E ratio are amazing beginner stocks.
Period-Appropiate Stocks: Invest in technology-intensive stocks during times of growth, and in times of need, healthcare, basic needs, etc.
Conclusion
Stocks are far from complicated if you keep them easy. Just don’t get cocky, or complicated, and keep it fast, easy, finance. If you want more simple finance, sign up for my newsletter today, and be informed when I post as well as exclusive posts.
