How to make money in the stock market









What are Stocks?
Stocks are pieces of ownership of a company or capital raised by a company by issuing shares. Think of it as a company that has been sliced into small pieces called shares, and these shares are available to the public to buy. When you buy one or two shares you become part of that company. Most companies start up as private, and as they grow and need more capital to expand, they may issue their shares to investors and consequently, the founders may end up with a substantially lower percentage of shares than they started with. To do so the company has to go public- Initial Public Offering - IPO. 
To understand the concept of stock investment, some investors acquire knowledge by taking online courses like "Growing Wealth With Stocks" and reading Books like "Growing Wealth Passively" 

 There are two categories of shares that a company may issue: Common stocks and Preferred stocks.
Common stock is usually what most people refer to when they buy shares from a company. These shareholders have voting rights to participate in the election of the board of directors, capital growth when the stock appreciates as well as profit (dividend) payout.
Preferred stock is more expensive to buy and you might have to be part of a company to buy it, it doesn’t come with voting rights but has fixed dividend payments. Another advantage of preferred stock is that in the event of liquidation or bankruptcy these shareholders are paid off first before the common shareholders do.
Since preferred stock is for employee-owned companies and not open to the public. Moving forward we will be talking about common stocks.

Common stock is further divided into two types
➤ Individual stocks, example Apple, Amazon or Microsoft stocks
➤ Diversified stocks, these are divided into three categories, Mutual, Index, and Exchange Traded Funds ETFs

 Why do companies sell stocks? Stocks are sold and bought on different platforms. The most common platform is at local banks, most banks deal with stocks. Secondly, stocks are also sold through stockbrokers. These are brokers that have branch locations or online. 
Users of these services pay the bank or broker a management fee also known as expense ratio to sell and buy stock on your behalf. Brokers without branch locations might charge lower or no fee to compensate for not having an office, some of the brokers with branches are Vanguard, Fidelity, Schwab, and the online brokers are Questrade, Ally and E-Trade, some of the online brokers are apps Robinhood, Betterment. Always do your due diligence to check the management or commission fee before choosing a broker

 Why do people buy stocks?Investment is all about making money. People buy stocks to make more, there are two ways to make money in the stock market, capital growth and dividend payout:

Capital growth is when a company expands and creates more value. Their assets appreciate (capital appreciation), kind of like equity, as such the shareholder who initially started with just one share with time it might be worth the price of multiple shares. The shareholders can sell some of their shares to others to make money.

Dividend payout is like a loyalty compensation. You may have heard of companies paying their shareholders. When companies grow in value and assets making more than estimated profit, they decide to pay some of their profits to the shareholders. These profits are called dividends. These dividends are usually paid quarterly, semi-annually or annually.

 Where do people buy stocks? Stocks are sold and bought on different platforms. The most common platform is at local banks, most banks deal with stocks. Secondly, stocks are also sold through stockbrokers. These are brokers that have branch locations or online. 

Users of these services pay the bank or broker a management fee also known as expense ratio to sell and buy stock on your behalf. Brokers without branch locations might charge lower or no fee to compensate for not having an office, some of the brokers with branches are Vanguard, Fidelity, Schwab, and the online brokers are Questrade, Ally and E-Trade, some of the online brokers are apps Robinhood, Betterment. Always do your due diligence to check the management or commission fee before choosing a broker

 Stock buying and selling strategies. 
They are four strategies when it comes to stock trading. Day, Swing and Long tern Holding:

➤ Day trading is when people get into the market to buy and sell within seconds, the aim is to make cash instantaneously, an example is exchange-traded funds ETFs where the shareholder manages it themselves less or no commission or management fee, these people have experienced in the stock market.

➤ Swing trading is when you keep monitoring the market to see the ups and downs and buy or sell when the time is right, it might take days or weeks, an example is an index fund, these people also have an idea of stock trading

➤ Position or Long term, these are when you buy and hold for a long period, mostly for beginners who just go to the bank or stockbroker and choose their stock with the assistance of a fund manager, an example is a case with mutual funds.

➤ Trend trading is neither short nor long term, the investor simply follows the trend of the market. Mostly fluctuating depending on situations like politics, economic or trade crisis. 

 Where to learn more about stocks.
Investors can learn more about the stock market in the following. news or television: Bloomberg TV business week, CNBC mad money and money talk TV shows, Yahoo Finance news, etc.

Another way of learning about the stock market is by reading books.