- January 31, 2020
- Posted by: Jamshaid Hameed
- Category: Uncategorized
Looking at investment bankers, businessmen and other ultra-rich people you must have wondered how amazing their life is. This entirely true because unlike popular belief there is nothing money can’t buy (Obviously within the range of human possibility). Dreaming about life like them is not bad but the real question is what you can do about it? How can you invest your money to get favorable returns and whether you have enough money to invest or not? Here we will tell you every single thing there is to know about beginner’s way into the stock market.
What is a stock?
You have heard this word a thousand times and although it always makes sense, what exactly is the stock? Basically, it is a security given to an investor by a corporation that entitles the investor to a proportion of the company’s shares. This means that they will be entitled to ownership, profits and losses of that particular company. Stocks are usually bought and sold on the stock exchange and every portfolio has to adhere to government regulations depending upon the countries involved.
What is a mutual fund?
A mutual fund is a pool of money collected by adding investments from different investors and the fund is used to invest in something valuable like stocks, bonds, money market instruments, and other financial assets. This is an easy way to make little investments valuable and get a better return out of them. Mutual funds are mostly handled by big investment companies where the brokers buy and sell stocks and other assets and boost the value of the investment.
How much investment do you need to start investing in stocks?
This is the trick question but factually speaking you can start investing in stocks even from $1. We know that the stock companies and the brokers always intimidate you with their big number talks and how they need millions of dollars for a few shares. Realistically speaking, these stocks and shares have to be bought as a whole unite and they are normally worth hundreds and thousands of dollars.
Although this sounds insane there are companies that sell a whole independent stock for as little as one dollar. Some prominent names Charles Schwab, Robinhood, Square, SoFi, and Stash, etc. let their customers buy shares only at a fractional amount, sometimes this amount could be as little as 1 dollar which almost anyone can pay.
Why are companies selling their shares cheap?
Competition is everywhere but some companies have to face it more than the others because they have fewer resources. Others might be winning already but they want to stay ahead of everyone for a long time. For all these reasons companies need more investors and an incentive to get a whole independent stock pulls in a lot of new investors. The sum of all their investments is equivalent to one investor paying a huge price for a share. The tactic is more inclusive and many investment experts have found it a positive sign both for the companies and the investors.
Cheap independent stocks vs. Mutual funds
Well, when it comes to choosing what is good for an investor especially the one who is just starting, our vote goes to Mutual funds. Mutual funds are always a good first investment as they are safer, they are handled by professionals and the chances of earning more profit are high. This is because buying independent funds reduces your market reach and you are unable to reap the fruit of different types of investments. At the same time, the fees for managing independent low-cost funds are higher than the mutual funds. It is a bigger risk with lesser value and hence studies and experts suggest that Mutual funds should be the first option for any novice investor.
Who are these independent funds for?
Most experts suggest that if you do not have enough money you should trust something more reliable like a mutual fund. However, if you already have enough investments for your retirement and have extra money to experiment with, you can start with smaller investments. It is a good way to test out how funds work for different companies. You can invest in bigger companies with a small investment and then decide where you want to put your money and time. In this way, you can strategically make a lot of fortune without losing your retirement funds in any unwanted loss in your investment. In the end, it’s all about luck and expertise, if you have both you can get plenty of benefits from the cheap shares and stocks. However, if you are doing it to get better returns on your hard-earned money, You should not consider wasting your time in independent funds. Play sa