Learn The Stock Market And How to Trade

When I first started investing I felt my only choices were to buy stock market indices or hold my money in savings.  The traditional (read: lack of) teaching I received in high school was woefully inadequate as to all of the different options to place your money.

4 Things You Can Do Other Than Buy Stock Market Indices

1. Short The Market – You can always bet the stock market, or a particular stock will go down.  This is done by first selling a stock you don’t own, then buying the stock back (hopefully at a lower price) to give the share back to the person you took it from.  Bizarre I know, but it’s totally legal and a way to bet against the market.  Be weary though, because a stock can only go down to 0, but can go up forever.
2. Buy Specific Stock for Dividends - Many people have done well shirking the DOW 30 or SP500 and buying only those stocks with high dividend yields with a track record of increasing their dividends frequently.  These are nice because they create an accountable cash flow and are currently taxed at a reasonable rate of 15% (though I bet this tax rate will go up in the next year or two.)
3. Buy Or Sell Options - Options are a contract to buy or sell a stock at at given price at some time in the future.  The vast majority of the time options are never exercised (cashed in) so if you sell options that never get used you can make a little side income off of the stocks you already own, and this can be done on an open exchange just like the NYSE or NASDAQ.
4. Trade Stocks – Other than just buying stocks, you can just trade them.  How is this different?  Well you can set you sell price at the exact same time you set your buy price, when the sell price is crossed most online stock market brokers will make the sale happened.  You had no intent of keeping the stock, you just knew the price was going to increase over the short term.

Learning the stock market will give you the confidence to not just follow the normal (giving your money over to a guy in a suit who’ll do something safe with it and take a piece of the action for it.)  Buying stock market norms may not be good for your retirement.

Related posts:

1. DOW Up! Sell Now? Wait for More? The Market is Fun Again!
2. Stock Market 101
3. Stock Market 101 – Part 2
4. Stock market investment
5. Want to Make Money Stock Market Trading? Then You Need Money to Stock Market Trade