What are stocks?
If you invest in the stock market, you are buying part ownership in a company. The ownership is divided up into shares, also called stocks.
What is a stock market?
A stock market is the place where stocks are bought and sold. There are different stock markets for different countries, some of the biggest are in New York, London, Tokyo and Hong Kong.
How to buy stocks
Traditionally you did this by calling up a stock broker who bought the shares for you, but these days it’s very easy to do this online.
What should I buy
This is the difficult part. There are lots of people paid huge amounts of money to decide what stocks are likely to rise in value most, but even they can get it wrong.
If you want to buy stocks will need to either
- Do a lot of research into the companies that you are planning to buy
- Employ someone else to buy shares for you
- Invest in a fund
What is a fund?
A fund is a pot where a lot of different shares are put into. They are generally themed in some way, either according to the country that they are from, or from the sector that they are from – eg a collection of different building companies.
What are the best ways to invest
Invest as early as you can
The earlier you invest the better generally as your money will have more time to increase in value
Invest for the long-term
If you will need the money in the short-term it is best not to put it into the stock market because in the short-term the amount of money that you put in can go down in value so you might be left with less money than you need.
Over the long-term however the stock market has shown good growth and is likely to continue to do so
It’s better to invest regularly and to make it a habit. If you do this then you will hopefully not notice that the money is being spent but after a good period will have saved a good amount.
You don’t want to put all of your money into the same country or the same area – oil for instance – because if that area or country does badly you will have lost money. If you are a genius chooser of stocks you might be able to put all your eggs in one basket and make good money out of it, but most people will not be able to do this and are much more likely to lose money.