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STOCK INVESTING FOR BEGINNERSThis stock investing for beginners section will attempt to clarify the crazy and exciting world of stock trading. We'll first go over what a stock is, and then go into explaining what a stock market is. If you're a child reading this, I applaud you! My kids learned about stocks at a very early age. It's amazing what children are capable of learning! Now as teenagers, they talk about stocks and the stock market as part of everyday conversation. They follow the stocks they own, and make informed decisions as to whether they want to hold or sell. You can do this too! There are channels on TV (like CNBC) dedicated to what's happening in the stock market. You will probably see lots of frenzied people Let's try to break it down so it's not so overwhelming. Before we start, let's just say that investing in stocks is nothing like putting your money away in the bank. When you deposit money in the bank, you are putting it in a safe and secure environment. Of course, you make very little interest on your money, but that is the price you pay for safety. It's good to keep some money in the bank, but at some point you will want to venture further outside of your safety zone, and take a little more risk for a better return (more money). How much risk will depend on you.
The simplest way to explain what you're doing when you buy stock in a company is that you are actually buying part of a company. Probably a very, very small part of a company if you only have a small amount of money, but you will still own a little chunk of it. These little chunks are called shares. As an owner of these shares, you are then called a shareholder, a stockholder, an investor in the company. One main reason a company will sell you shares of their company is because they need to raise money to make their company grow even bigger, but they may not have the capital (another word for money) to do this. When you buy shares in a company, you are helping them grow. You can buy one share, one hundred shares, or ten thousand shares if you want. It depends on how much money you have, and how much money you want to invest. If you put $500.00 in the bank, your money will always be there and you will get a tiny bit of interest that will be added to your account monthly. If you buy a few shares in a company with that same $500.00, you could double your money very quickly if you choose a company that is new and growing, or you could lose almost all of your $500.00 if that same company hits some bad times and makes some bad decisions with your money. This shows how important it is to carefully choose the company you want to be part owner in.
There are thousands of companies out there, some big and some small. Some companies have been around for years, and some These are huge companies that have been around for many, many years. Usually, these companies are safer to invest in because they make things or provide things that everyone uses and buys everyday. Wouldn't it be cool to say you own part of Disney? Many kids start out by owning a share or two in one of these companies as their first investment outside of a bank account. When you buy or sell stock, you are doing something that is called trading. You can choose to trade from thousands of companies that sell a multitude of different services and goods - toys, food, medicine, clothing, shoes, sports equipment, make-up... the list is endless. For first time investors, it is suggested to invest in a company that you know and that you like. When my kids were very small, they all decided to buy a few shares in a company called Chapters, because they all loved to go to the Chapters book store and look at books. They were very excited to know that they actually owned part of that company.
People go to a flea market to buy different types of A stock market is just that, a great big supermarket where you can buy and sell stocks, or shares in companies. The stock market is also referred to as a stock exchange, so if you hear that term, it's the same thing. There are many stock exchanges in the world, so you can trade stocks in whatever country you live in. Sometimes you will hear that the market is up. This means that a lot of those thousands of stocks in the market are going up in price that day. When you hear that the market is down, the same principal applies. The overall market is going down in price. You will hear the term bull market for when stock prices are going up, and bear market for when stock prices are going down. The stock market never stays the same. Every day fluctuates, depending on the news, politics, how much money the companies are making or losing etc.
You can find out about any stock you're interested in by looking on websites like Yahoo Finance, Morningstar, Bloomberg, etc. My favorite is the Yahoo Finance site (http://www.finance.yahoo.com). When you are at the website, type in whatever company you would like to see. I'll pick NIKE for an example. As you type it in, it will give you the ticker symbol for it, which is NKE. All companies will have a short form (a ticker) of their company name, usually one to four letters long. Press enter and you will be taken to the NIKE page. It will show you the price of one share of the stock. It will also show you if the price is up or down from the price it was yesterday. At the time of me writing this article, it would have cost me $59.90 to buy one share of NIKE. Look to see what it's at right now. Is it up or down from when I looked at it? You will see a small graph on the right hand side. This is showing you what the price of the stock has done for today. Underneath the graph, you can click to see what the stock has done in the past six months, one year, two years, five years etc. Play around with it and you will see all sorts of information on NIKE. What's fun is that between 9:30am and 4pm EST, Monday to Friday, you can watch the price of the stock fluctuate as people trade. It is on real time.
Buying stocks is exciting and fun, but it can also be risky if you are just starting out. It's a good idea to just pick a couple of stocks that you think you might be interested in buying, write down the name of the stocks and the price they are today as if you are really buying them today. Decide how many shares you would be buying of that stock and then watch to see what happens to that stock as the days, weeks and months go by. See if you made money, lost money, or stayed the same. Another good way to practice with the stock market before actually putting your own money into it, is to play an online stock market game. A good one is StocksQuest. You can play this by yourself or with your whole family.
The stock market makes trading pretty easy, since you don't even have to drive to the actual stock market to buy any shares. All you need is a stockbroker (a person that can buy and sell shares for you). Most financial planning institutions will have their own stockbroker. They just need you to tell them how many shares of what company you want to buy. They will do that for you, for a fee. There is a fee when you buy, and a fee when you sell. Even though I can just pick up the phone and call my stockbroker if I want to buy or sell a stock, in most cases I can do it myself on the computer. When I do this through the computer, I go through a stock brokerage company. I just deposit money into an account that I have with them, and they deduct the price of the shares I am buying as well as their fee. It's really simple. Here's a list of US online brokers, and a list of Canadian online brokers. By the way, Oneshare is a great website if you want to get your kids excited about buying their first share in a company, or if you want to give the gift of stocks.
The following are the major stock markets, or stock exchanges, in the US and Canada: NYSE - New York Stock Exchange NASDAQ - National Association of Securities Dealers Automated Quotations System ASE - American Stock Exchange TSX - Toronto Stock Exchange
Sometimes you will hear about indexes. These are groupings of stocks to help us get a feeling, or an indication, of how things are going as far as the market is concerned. DJIA - Dow Jones Industrial Average S&P 500 - Standard & Poor's 500 Wilshire 5000 Russell 2000
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buying and selling on the trading floor. You'll hear fast-talking, loud commentators telling you how much a stock has skyrocketed, or how much a stock has plummeted. It can all be very confusing and most people just switch channels. Too hard to learn and too risky are the two comments you hear most. 
companies are just starting up. Think of a few brands that you see everyday. A few examples that everyone knows are Nike, Coca-Cola, Disney and McDonalds. 
merchandise, or a fish market to buy fish and seafood. 
