What is the Stock Market?
By simple definition, the stock market is an aggregation of people who intend to buy a stock (also known as shares) of a company. In the stock market, you can be a shareholder of Woolworths Supermarkets, Subway, Telstra, and other corporations as well.
Why do companies sell their company shares?
It’s because they want to raise more money to grow the company even more. Through selling shares in public, they can get a lot of shareholders that can contribute to building more factories, buildings, branches, hiring more people, and so on.
What you can get from buying a company share?
A stock market is also a form of investment. Aside from owning a tiny percentage of a particular company. It means that you can earn money from it. Note that not all investments will guarantee a huge income. It’s not easy money as it takes a lot of time and will always depend on the business’ performance. It’s important to do some research on the business or company before you invest your money in it.
How to earn in the stock market?
You can earn money from the stock market in two ways:
1. Dividends – An annual income from the company you’ve bought a share with. A good performing company is giving dividends to its shareholders once or more times a year. A dividend could be cash or another stock/shares for free.
2. Selling of stocks/shares – Your stock/share could have an increase in value over time.
For example: If you bought a share last month at a price of $2 per share and let’s say you bought 1,000 shares ($2,000). Luckily, the company performs very well this month to the point that it risen its share price from $2 to $3 (1$ increase) so that means the 1,000 shares you bought last month will have a value of $3,000 and if you will sell it in the stock market you will earn $1,000 in just a month.
How to invest in the stock market?
Nowadays it is very easy to invest in the stock market because of the technology we have today. With the use of a smartphone through apps or websites, you will now be able to invest in the stock market in the most convenient way possible.
According to stockbrokers.com here are the best online trading platforms in Australia now:
- CMC Markets – Best overall.
- IG Group – Best trading platform.
- CommSec – The best bank for share trading.
- Interactive Brokers – Best for professionals.
- Westpac – Best research.
Here at Funding Force blogs, we are keen to provide informative content that will help you understand things that are not only limited to mortgage and lending but also to the key aspects of the financial world.