Introduction to the stock market

Stock market

The stock market is not like shopping in grocery stores where you choose a product from a few varieties of options available, buying and selling in the stock market is a complex and formal procedure, unlike you bargain in the normal market for the product according to your budget.

You might have heard people saying the stock market has gone down or got increased, they are actually talking about the price of the stocks which fluctuate from time to time.  If you are not well-known about the stock market then let’s learn the stock market from the beginning.

What do you mean by the stock market?

The stock market is the marketplace where buyers and sellers of stock meet together to trade. Buyers are generally those people who have savings with them and they wish to invest in the market. On the other hand, people who sell shares are part of companies, to grow their company they need a certain amount of funds. In order to raise funds companies issue shares in the market. With each share they sold, they get the price for each share. Managers with higher authority in the company decide whether that money will be invested to launch a new product line or to enhance the infrastructure of the company or to provide a salary to the employees.

You can invest in the stock market according to the budget, the risk involved, decide whether to have invested for the short term or long term, depending on your needs and knowledge about the market. When you buy the shares of any company you get the ownership of that particular company, that means if you have purchased 20% of the shares of Xyz company then you are 20% owner of that company, and with time when the company will be at a position to repay back for your share then the company will refund your amount.

Also, if you are not financially stable or in urgency you need money, shares can be used as an asset. You can sell your share or trade your share in the market. To do the trading of shares, you need to learn the stock market sharply.

The major type of stocks to invest in share market

  • Simple Shareholder – when you buy the shares of the company as a simple shareholder then you don’t get any special privilege. But yes you can vote in shareholder meetings and you will also receive dividends when directors of the company wish to pay a dividend to the shareholders. If in case the following company gets bankrupt then the assets of the company will be sold and you might get back your invested money.
  •  Preferred Shareholder – preferred shareholders may not have the voting rights but definitely they will receive their dividends before regular shareholders. The risk involved in purchasing preferred shares is comparatively less than other shares.

There are many other instruments involved in the stock market like mutual funds, bonds, derivatives, etc which can be also purchased for investment purposes. You can also sell and purchase these securities with the help of a broker or any brokerage agency.

Stock market crash

We all know that the price of the stock market is highly uncertain, but the price of stocks tends to rise with time. There are many factors that affect the fluctuation in the price of shares, economic downfall can be the biggest reason for the dropped price of the stock.

The stock market crash is a sudden drop in the price of shares, where the market declines to issue shares. In this particular situation, the market grows gradually with time, it may also take months to recover the losses held. If you have already invested in this type of situation then you can do nothing about it, your portfolio may have lost its value in the long term but you don’t need to worry, just have some patience so that the market can be on track again.

To learn the stock market there are different courses available and if you know the basics then you can learn some tricks and tips to deal with crash scenarios happening in the stock market. You can never predict the market completely but you can surely analyze the market.

 

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