The Breakdown: The Basics To Buying & Trading Stocks
security that indicates the holder has a portion of ownership in a corporation. In short, it’s money you’re putting into a company to help them keep their wheels turning. In return, you are getting back a portion of their profits when their stocks start to rise.
This can come in the form of dividends or the payout when you sell or trade the stock. Think of it like this, when business is good, stocks go up, when business is bad, stocks go down. With that being said, you could very well lose money, so it’s important to pay attention!
Bonds, on the other hand, are debt obligations and are a form of borrowing. If a company issues a bond, the money they receive in return is a loan and must be repaid over time. Just like the mortgage on a home or a credit card payment, the repayment of the loan also entails periodic interest to be paid to the lenders aka, you!
Trading vs. Investing
When you’re trading you are buying stock for the sole purpose of selling it quickly. This means you already know what you’re getting into as far as the company and can foresee its stock going up. For instance, Kylie Jenner just signed on to sell her cosmetic line exclusively at Ulta.
If you’re a smart investor you’ll take up some stock as she is very popular and you know the holidays are coming, so that stock is going to skyrocket then go back down after the holidays. You’ll want to sell just after Christmas.
Investing, however, is pretty much for the long haul. Stocks like