Any investment is an active activity in the field of finance. Essentially, any investment reflects the most important principles of life for any adequate person – to live better in the future, you have to put in the maximum effort now.
There are a large number of investment tools. Some of them allow you to earn money in the short term, others in the long term. If you consider stocks, they are an investment tool that works for the future. In order to understand the procedure of these attachments, you must first familiarize yourself with the concept.
Shares are securities confirming the right of their owners to part of the property of the issuing company, as well as part of the profit in the form of dividends.
Shares are sold on the stock exchange. However, a private person does not have the right to independently conduct transactions on such a market, he will have to act here through intermediaries.
There are 2 ways to make money investing in stocks
- Receiving dividends is the easiest and most understandable option. In this case, the owner of the capital simply acquires shares and receives part of the net income of the issuing company. However, this option is not always promising in the long run;
- Stock market speculation can bring a much higher income than paying dividends. The big principle for making a profit here is: buy stocks cheaper↓, then resell them more expensive↑. In order to achieve maximum profitability in this case, it is important to study the stock market, analyze the situation and make reasonable forecasts of the future price movement.
Since in most cases stock trading is done through brokers, it is important to have an idea of the operating principles of these companies. Moreover, the right choice of an intermediary is of great importance. This question will also be addressed in the presented article.
How to choose the right stocks to invest?
When deciding which stocks to invest in, an investor must consider a large number of factors. Since stocks are securities of a certain issuer, their profitability largely depends on the performance of the company.
The economic analysis of the activities of the organization makes it possible to evaluate and understand:
- how efficient the company’s work was during the reference period;
- the amount of profits he received;
- what amount has been allocated to the payment of dividends to shareholders;
- how much funds have been sent to reserves;
- does the business have cash;
- whether the company has prospects of making large profits in the future, or whether it is running for attrition.
Data for business analysis can be extracted from only 2 reports:
- balance sheet;
- Income statement.
The image evaluation of the transmitter is also of great importance. More often than not, scandals and gossip surrounding a company can indicate that its stock will depreciate in the near future. Even if that doesn’t happen, the rate will almost certainly drop sharply.
The level of liquidity of shares is also of great importance for investments. This means the ability of stocks to be exchanged for cash quickly and without loss. In other words, such a security can be sold at any time at a price not lower than that for which it was purchased.
The analysis of all the factors presented above helps the investor to choose the most suitable stocks for investment. This will help to achieve a long-term investment and to get the maximum profit from the invested capital.
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How much can you earn by investing in stocks?
In fact, everything is simple – the maximum income is not limited by anything.
With the help of assets online business, you can achieve profitability of up to 300% per year. However, if the long-term period is considered, the annual return in most cases will not exceed 50%.
The numbers named are not final. History knows many cases where people managed to earn huge capital simply by investing in stocks in just a few years. To do this, they bought securities in times of crisis and sold them in times of calm.
In fact, earning an income as an average investor is not difficult. It is enough to devote a few months to intensive preparation for trading to ensure a profit of around 30% per year.
However, it will take decades of hard work and countless hours of in-depth market analysis to invest money in stocks like a pro with above-average returns.
It turns out that it is possible to achieve profitability of 30% per annum by learning to perform a competent analysis of the market situation, timely getting rid of unprofitable and overvalued stocks.
The amount of income depends on the ability of the investor to correctly choose the time to fix the profit and on the high speed↑ of reaction to losses – the amount of the investment account sag.
Why invest and is it good for me?
An action is a security fraction that indicates ownership. When you buy stock in a company, you are buying a stake (even a very small one) in the company. You can receive income from the purchase and sale of shares or dividends – part of the company’s profits depending on the results of a certain period.
A bond is a debt security, according to which the issuer – the state or the company that issued it – undertakes to pay a certain percentage in the future.
The easiest way is to buy securities and, after a while, resell them for a higher price – and make money from it. The main thing to remember is that profit is not blind luck, as in a casino, but the result of thoughtful actions. Not a game, but a job.
Not only large capital owners can invest money in stocks, but also ordinary people. It’s important to start investing now so that you can be a successful investor in a few years and get closer to your financial well-being.