How to Invest in the Stock Market
Types of Investments
The Stock Market is just one of many different financial markets. Forex and Bonds, for example, are separate markets from the stock market. Each financial market is separate and has its own exchanges and venues, different rules and regulations, and different investment vehicles. There are many ways to invest your money.
For example, you can buy a Certificate of Deposit (CD), or merely open a savings account at your local bank and earn interest. However, if you want to make far more than most banks offer for a savings account, consider what investments are right for you. If you are new to investing, then consider starting out by learning how to invest in the stock market.
Investment Savvy and Knowledge
There are more myths and scams out in the world of investing than in any other industry. The reason there is so much misinformation is because of the way individuals think about the financial markets, and stocks in particular.
The Stock Market Is the Business of Businesses
Contrary to popular myth, the stock market is NOT a casino, it is not a place to gamble. It is the business of businesses. Every public corporation, of which there are some 6,500 listed stocks on the US exchanges, is an important part of the US economy.
These corporations are the major employers in the US. This means everyone needs to respect the stock market and treat it as a place to invest rather than gamble. The companies that are traded on the stock market represent the future economy and prosperity of the US.
Why Invest in Stocks on the US Exchanges?
Many new investors will hear about Forex and how easy it is to make money, will read about getting rich buying gold, or may be lured by penny stocks or Bitcoin.
These are all extremely high-risk investments which require extensive education, experience, and expertise. Stock trading is the place to start investing because stocks are actually lower-risk and are the easiest of all trading instruments to learn how to invest or trade.
Investing vs. Trading
The modern stock market offers many opportunities for new investors. Long-Term Investing is for retirement, major purchases such as buying a home, a vehicle, or for college funds. Trading is for monthly income. Trading is a term that most new investors assume means “Day Trading”. This is one common misunderstanding that causes a lot of confusion. “Trading” is a broad term that is used in all financial markets.
The word “trading” only means that someone is either buying or selling a stock, bond, commodity, currency, or Exchange-Traded Fund (ETF) as examples. “Trading” does not define the length of time the buyer will hold the stock. When you hear or read about the term “trading”, keep in mind that it may not have anything at all to do with Day Trading. There are many different styles of short-term trading.
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