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Stock Market Investing: What You Need To Know

By Author: Weston Patton
Total Articles: 244

Do you ever wish you could own a piece of a company? If your answer is yes, then investing in the stock market may be perfect for you. Prior to going out and purchasing several stocks, there are a few facts that you must understand about the market. The piece that follows offers the tips you need.

Be sure to use free resources to check out the reputation of any potential brokers. Carefully investigating before giving them your money helps you avoid unscrupulous and inexperienced brokers.

Find out the exact fees you are responsible for before hiring a broker or using a trader. There will be entry fees and other fees that could be deducted upon exiting, as well. The fees surmount quickly and can be quite sizable if you trade often and are a long-term trader.

Keep in mind that there is a lot more to a stock than an abstract asset that you can buy and sell. When you own stocks, you may also get voting rights and other benefits. Therefore, you actually own a share of the earnings and assets of that company. You are also generally given the chance to vote for who should be running the company, and what actions they may take that affect shareholder value.

A good goal for your stocks to achieve is a minimum of a 10 percent return on an annual basis, because any lower, you might as well just invest in an index fund for the same results. If you wish to project your expected return from any particular stock, add the projected earnings rate to the dividend yield. If your stock yields 3% and also has 10% earnings growth, expect somewhere around a 13% overall return.

If you are new to the stock market, you need to realize that success may not come quickly. It usually takes quite a while for a company's stock to become successful, and a lot of people tend to give up. Investing requires patience in order to pay off.

It is very essential that you always look over your stock portfolio a few times a year. This is because the economy is changing all the time. Companies will merge or go out of business, and some sectors will pull ahead of others. There are many other instances that can occur that can make a big difference on the performance of a particular stock. It's crucial to track your portfolio and make adjustments accordingly.

Even if you plan on selecting and trading your own stocks, consult a financial adviser anyway. A financial counselor doesn't just tell you what the best investments are. They'll help you understand your goals, retirement plans, risk tolerance and more. After this, both of you will be able to come up with a customized plan.

As you can see, investing in the stock market can be fun and exciting. No matter which investment method you choose, all of the tips here can help you make the most of it.

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