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Financial Management: What You Should Know About Stock Market Investments

By Expert Author: Gino Caldwell

Getting involved in the stock market is an exciting opportunity. There are many different investment vehicles, tailored to different financial goals and involving different amounts of risk. Whichever approach you take, you need to know some basics about investing. The stock market isn't particularly complex, but learning successful trading strategies can take a lifetime. You can make money. Here are some investing tips that will help you do just that.

Take advantage of free resources to investigate investment brokers before contracting with them. Knowing their background will help you avoid being the victim of fraud.

Watch the stock market closely prior to jumping in. Before investing, you want to watch the market for awhile. If you are unsure of how long to study the market, try to watch it for at least three years. That way, it is possible to gain a greater understanding of the ways in which the market functions, and you will stand a greater likelihood of generating profits.

Remember that stocks are not just simple pieces of paper that you buy and sell for trading purposes. When you own stock, you own a piece of a company. Therefore, you actually own a share of the earnings and assets of that company. Sometimes, stocks even come with the chance to vote on issues affecting the company that you are invested in.

Exercise your shareholder voting rights if you have common stocks. Depending upon a given company's charter, you may have voting rights when it comes to electing directors or proposals for major changes, such as mergers. Voting may be done by proxy through the mail or at the shareholders' annual meeting.

Try to purchase stocks that will do better than average. Average is typically defined as 10% annually. To project the potential return percentage you might get from a specific stock, look for its projected dividend yield and growth rate for earnings, then add them together. A stock whose earnings are growing at 12% that also yields 2% in dividends offers you a potential return of 14%, for example.

There are too many factors involved to try and make your money from timing the market. History has proven that the best results go to those who steadily invest equal sums of money into the market over a long period of time. Figure out how much of your monthly income you are comfortable investing. Commit to making a regular stock purchase with this amount.

When you first begin to invest in the stock market, be sure to keep it simple. It is smart to prepare yourself for entering the market by reading up on many different investment strategies, but you should choose one method and stick with it if it works for you. This will save money in the long term.

Hopefully you now have it. You know have a basic knowledge of investing and how to go about it. While you may have not planned ahead as much during your youth, sometimes planning is essential. After learning more about investing, start using this knowledge for your own benefit.

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