Part 1: Essentially What Is Stock Investing?
Most of what you need to know is displayed in this example below. Follow along and reference back to this picture when prompted to. This will provide you with deeper understanding (hopefully).
This Image depicts the stock data for the company Apple over the last year.
What investing means - in the simplest layman terms - is the act of purchasing a portion of a company on the stock market for an agreed upon price. This portion of the company has another name and that name is a stock. So when you hear someone say that they bought a stock in a company they mean they have essentially purchased a portion of the company. Stock can be sold back at a later date when desired.
Using the image above you can visually see how much the stock of the company Apple is worth. Glance up to the picture and look near the top left, you should see something that reads "$203.26 USD." This means that at this time of viewing Apples stock (Jul. 19 3:42 p.m. EDT) the price of one stock was $203.26 USD. Look at the Nov. 2018 marker. You are able to see that at this marker a stock of Apple was worth around $220 USD.
So, stock can fluctuate. Take a glance at the highlighted point. In the past year the lowest price of this stock was about $142 USD. A hypothetical that could have happen was that someone may have bought ONE stock in apple at the $220 USD price, then after sometime the stock fluctuated and dropped down to the to a lesser value. I.E. They could have sold their ONE stock at $142 USD instead of the price they bought it for ($220 USD) losing $78.
Now that you know what a stock is, I want to introduce you to stock exchanges and ticker symbols. A stock exchange is a platform where companies can have there stock traded on. Some exchanges may be bigger, some maybe smaller. For instance you may have heard about the New York Stock Exchange, abbreviated to NYSE. The NYSE is simply a platform where companies have their stock. What's cool about the NYSE is that it's the largest in the world. Or you may have heard of my favorite market (cause its Canadian) which is the Toronto Stock Exchange, abbreviated to TSX.
The last stock exchange I want to bring into light is the NASDAQ. The NASDAQ is where Apple is traded. Glance up to the picture and see near the top-left corner, right underneath market summary, exists some text that says "NASDAQ : AAPL." Now we already know what NASDAQ is, it's just the market that the stock trades on. What does AAPL mean? Well AAPL is the ticker symbol for the company Apple. The ticker symbol is an abbreviation for the companies.
Part 2: Please Educate Yourself.
There is no way I can provide the proper methods of investing in this blog. So what I can do i recommend some resources for you to educate yourself with.
1. I stronger abide by reading. It is literally (pun intended) one of the greatest things you can do to educate yourself. There are so many great books out there. Most notably I thought "The Intelligent Investor," by Benjamin Graham was a great piece of literature. Again "Rich Dad,Poor Dad," by Robert Kiyosaki and Sharon Lechter is another highly recommended book to being reading.
I'm going to level with you however. These investing books are a super dry read. So if you are going to read them maybe have a glass of water nearby. But while they are in-fact dry, the information is uncanny, there is nothing like it.
2. View some online resources. My personal favorite are Yahoo Finance and Bloomberg. These two websites are frequently updated with the newest financial news and have all the latest stock data. If you are looking for quick stock information Google Finance is great.
Checking these sites don't have to be everyday but It can be once every couple. You don't want your whole life to be controlled by these stocks. Stocks fluctuate all the day and watching them go up and down every second is just not healthy for you.
3. Honestly in my opinion I love using YouTube as a resource but you have to use it cautiously. Most people on the platform are not "certified investors" or whatever you call it. They are people that are like you and I.
I don't have any channels to recommend but I do suggest to watch some videos and make your own educated guess whether that information is trustworthy or not.
Part 3: How to Invest (basic)
To purchase stock in a company there needs to be communication between you and the stock that you want to purchase. Thus transactions need to be done through a broker. A broker is someone who matches a buyer with a seller.
Generally speaking banks are good brokers (from my knowledge). To find out whether your bank can contend as one a quick google search will help you out. It is not too difficult to identify.
The only downside using a broker is that when you buy stock most brokers charge a commission. For instance I know when purchasing stock through the Royal Bank of Canada (RBC) they charge $10 in commission and $10 to sell once more. RBC is on the price range of brokers. Questrade - a newer platform - has a $5 commission charge which is must cheaper than the $10 at RBC.
If you reside in the USA, a broker named Robinhood provides basically the same thing that every other brokers provides but their commission is $0. Recently Wealthsimple brought this to Canada - commission free trading!
If you are the most basic investor I suspect you are, I believe any current bank you are with is a great starting point for your investments. I will write another blog post in the future weighing the pros and cons but if you can't wait that long then doing some of your own due diligence doesn't hurt.
With most brokerages you will be able to get them to help you with your investments or you can do it all yourself. Really it's up to you.
Inside each of these brokers - mainly if they are big banks - what I suggest doing is opening a Tax Free Savings Account (in Canada) or a Roth IRA (in USA) to invest through. These accounts have a great upshot as any money made in them are tax free.
Investing comes in all sorts of flavors. What I described to you today was stock trading. There are other methods of investing: mutual funds, index funds, FOREX (currency exchange) and many others. I felt stocks were the coolest and most interesting that's why I chose to share them today.
What I say to do from here on out is to follow the brief instructions proved in Part 2 of this blog. Just by doing that the other things that I didn't discus today will be easily learned. I wish you the best in your investing journey. A key thing to remember is to just have. If you feel restricted by forcing yourself to learn through a boring book then maybe YouTube is for you, you just have to be more careful.
Cheers.
Generally speaking banks are good brokers (from my knowledge). To find out whether your bank can contend as one a quick google search will help you out. It is not too difficult to identify.
The only downside using a broker is that when you buy stock most brokers charge a commission. For instance I know when purchasing stock through the Royal Bank of Canada (RBC) they charge $10 in commission and $10 to sell once more. RBC is on the price range of brokers. Questrade - a newer platform - has a $5 commission charge which is must cheaper than the $10 at RBC.
If you reside in the USA, a broker named Robinhood provides basically the same thing that every other brokers provides but their commission is $0. Recently Wealthsimple brought this to Canada - commission free trading!If you are the most basic investor I suspect you are, I believe any current bank you are with is a great starting point for your investments. I will write another blog post in the future weighing the pros and cons but if you can't wait that long then doing some of your own due diligence doesn't hurt.
With most brokerages you will be able to get them to help you with your investments or you can do it all yourself. Really it's up to you.
Inside each of these brokers - mainly if they are big banks - what I suggest doing is opening a Tax Free Savings Account (in Canada) or a Roth IRA (in USA) to invest through. These accounts have a great upshot as any money made in them are tax free.
Part 4: The Conclusion, Is That all?
Short answer is pretty much. Long answer is not at all.Investing comes in all sorts of flavors. What I described to you today was stock trading. There are other methods of investing: mutual funds, index funds, FOREX (currency exchange) and many others. I felt stocks were the coolest and most interesting that's why I chose to share them today.
What I say to do from here on out is to follow the brief instructions proved in Part 2 of this blog. Just by doing that the other things that I didn't discus today will be easily learned. I wish you the best in your investing journey. A key thing to remember is to just have. If you feel restricted by forcing yourself to learn through a boring book then maybe YouTube is for you, you just have to be more careful.
Cheers.
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