What Is a Stock?
A stock is a long-term, growth-oriented investment representing ownership in a company; also known as ‘equity.’
How to Invest in Stocks
When investing in stocks, you don’t necessarily need a lot of money to get started – you can invest with as little as $50. You can also decide whether to pick and choose stocks individually, have an expert to manage the process, or use your employer’s 401(k). Once you start to invest in stocks, you might want to open an IRA or a brokerage account. This allows you to have some options and determine what best fits your financial goals.
Opening an IRA is one of the best financial options to save for retirement, as there are also tax benefits to boost your savings. A brokerage account is commonly used by investors to buy and sell securities, such as stocks, mutual funds, and bonds. Similar to a bank account, you can withdraw and deposit money into and out of a brokerage account. As previously stated, there are differences between brokerage accounts and retirement accounts, like tax advantages and certain penalties.
The market is unpredictable, especially with unforeseen events like the COVID-19 pandemic. When buying stocks, utilizing a combination of price- and time-based strategies can alleviate the effects felt by volatile market conditions. Time/calendar-sensitivity means stocks are purchased in timely intervals – weekly, monthly, or quarterly – until the equity goal is met. Price-sensitivity hinges upon the extent to which stock price affects the investor’s purchasing decisions. Keep in mind, a price-sensitive approach is only helpful if the market is performing poorly. For examples and specific scenarios, take a look at this blog.