Making our money work for us is essential today, for many, a stock market investment is the best-known option to do that. From reporting on the news to movies, the stock market has become part of everyday life, but how many of us really understand what it means to make a stock market investment?
The stock market is not a singular entity, rather it is composed of the stocks of thousands of different companies. Each stock has a value that correlates with the perceived value and performance of the company in question. In its simplest form, making a stock market investment means simply buying stock of a company. Choosing the best stock to buy, and when to sell it for maximum profit, that is the difficult part.
Buying stocks is done through an intermediary, the stockbroker. What we think of as a stockbroker has been transformed in the digital age, with the traditional, full-service broker still offering relatively high-cost transactions that include guidance and investment advice. However, it is the online brokers that have opened stock market investment up to a vast new audience.
Online services allow anyone to make stock market investments from home, quickly and conveniently, and often at a much lower cost than the traditional brokers. Those cost savings have a price though, while they offer convenience and affordability, in general, you are also left alone to choose the stocks you invest in, so require you to be better informed. Most online brokers do offer a range of tools and assistance to help you make informed decisions though, usually provided free of charge to account holders.
This includes market data, charts, economic news and so on, which allows investors to assess the prospects of
Risks include the potential for the company to lose value, or even fail completely, while the potential for growth reflects the amount a stock may go up in value, creating investment profit. If a company product or initiative is not well received, then that can have a negative effect on the company as a whole, including losing money. That, in turn, will see the stock price fall, which of course also causes a loss on investment if it falls below the buying price. Economic conditions can also cause a fall in price, for instance, if a country undergoes a recession, then certain products could see a fall in demand, with companies who produce them losing value and stock price as a result. While losses can be small, with stocks it is important to remember that if a company completely collapses and ceases to trade, its stock value falls to zero, meaning the entire investment is lost.
Profits come from a product or innovation being well received, increasing the value of the company and increasing stock prices. This can happen in the short, medium or long-term, with stock investments lasting 20 years or more in some established companies.
A stock market investment is flexible, able to meet the needs of short- and long-term investors, providing potential profits in weeks, months, years and decades, depending on strategy. Convenient and easy to access, stock market investments today offer immense opportunity for everyone.
For the full breakdown of investing in shares check out our article: Investing in Shares
We welcome you to give our team a call to discuss your investment goals and objectives.
You can call Walker Capital Australia on +61 2 8076 2210, and we’ll see how we can help you achieve your investment goals.