![]() Inevitably, whenever I’m teaching someone about the basics of stocks, someone will pipe up with a myriad of questions like these:īefore you make an investment in any sort of stock, you’re going to want to stop and ensure you understand how to go about deciding what stocks to buy. Understanding stocks is the first step before you start piling your money on whatever looks good on the day. You can buy and sell whenever you want through your broker or self-serve sites like E*Trade or TD Ameritrade. So, ideally, you want to invest in strong-performing companies. If the company does well, your stock will do well. Stocks are also called equity for that reason - you own a tiny piece of the company. When you own a company’s stock, you own part of that company. Instead, stick around for a no-BS lesson all about stocks and bonds, what they are and what part they can play in your investment future. SPOILER ALERT: Cramer has done much worse than the S&P 500 since 2008. ![]() If you’re looking for something like that, I suggest you go back to watching the pundits on cable news. This article isn’t going to be about which stocks are hot right now or what sort of investment strategy is going to make you into a zillionaire today. How do stocks and bonds work? How can you balance them in your portfolio? What’s the difference between stocks and bonds? That’s why we want to dispel some of those myths and notions surrounding investing by focusing on some of the most common topics you’ll hear when it comes to investments: Thanks to Hollywood and the (annoying) talking heads on cable news, we’ve come to think of investment as a maniacal creature that’s not suited for the average person… and many of us just don’t understand exactly how investing works. Investments are incredibly risky because all the pundits scream “financial crisis!” at even the slightest dips in the markets.Īnd, frankly, you have every reason to believe this.It’s a 24-hour Wolf-of-Wall-Street-style party where traders make millions of dollars daily while screaming “SELL! SELL!!” into a phone. ![]() From what I’ve seen, the two things people get most wrong about investing are thinking: Folks seem to think there is some magical way to make a fortune with stocks and bonds. ![]() People still don’t understand what investing is exactly. But first, let’s talk about the typical perceptions of investing. Stocks and bonds are a great place to start, so we’re going to dig into that in this post. There is more than 100 years of evidence in the stock market that suggests this. Investing is the single most crucial thing you can do to ensure your financial future - and the sooner you start, the easier it is to get rich. ![]()
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