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| Photo Credited to Allison Saeng on Unsplash |
Welcome to the most comprehensive guide of this blog post as your dear. And as a beginner, you will need to learn about the following details here in this blog post:
- What is stock investment?
- What are types of stocks
- Benefits of a shareholder
- How stock market works?
- how stock price is determined
- How to Invest in Stocks as a beginner
- Can Stocks Make You Rich?
What is Stock Investment?
Stock investment can be defined as a capital investing in companies who look for the capital to raise to expand their businesses through the issue of shares on the primary market they want to sell for a penny to shareholders. Stock is a form of units of shares.
When you buy stock of a company at price, you buy units of shares per share each. When you buy units of shares, you invest your capital in a company in hope for capital appreciation, dividends or bonus if they perform well.
What are Types of Stocks?
The market under the umbrella of the local/international Stock Market is basically divided into two stocks, namely:
1. The Primary market
2. The Secondary market
1. The Primary market basically deals with the buying of stocks or companies shares or equities during public offer. It involves initial public offer, public offer, private placement, bond and rights of issues.
Companies in the primary market is just new as if they are beginners, and they plan to list on the secondary Stock Market during the public offer.
The purpose of a company’s public offer or initial public offer to public buyers is fund they need to raise to expand their businesses in the future.
That is why they seek for fund through the public offer they want to sell per share each. When you buy shares of a company during public offer, you will receive share certificate which will be dematerialized in your CSCS if you register one of your chosen stockbrokers as a member.
2. The Secondary market involves and includes the buying and selling of (or holding of) companies’equities at the floor of local/international Stock Exchange which happens to be the market place. This market enables investors buy and sell securities because companies are listed on the stock exchange.
This is what is between buyers and sellers of securities on the floor of the stock exchange in the open and close of the market from Monday to Friday daily from morning to evening.
Benefits of a Shareholder
Once you buy units of shares of a company from either the primary market or the secondary market or both, you become a shareholder of this company that you will have benefits:
1. Bonus shares: You will receive free shares given to by the particular company, depending on the number of shares you bought if the company announce bonus after its fiscal year end.
2. Dividend Payout: You will receive dividends, depending on the number of shares bought, once or twice each year if the company perform well
3. Capital Appreciation: Through a stockbroker app of your choice, you can take profit daily by buying and selling on the stock exchange as an investor
How Stock Market Works?
Stock Market is a place where members of the market buy and sell to make profit or loss through the stockbroking app’s help as companies listed on the floor of the stock exchange.
No stock market can work without between buyers and sellers of securities daily. No stock could be bought and sold daily if companies are not listed on the stock exchange.
Stock Market can works through volumes and deals of companies because they are of liquidity which can be converted to cash within three days.
How Stock Price is Determined
Stock price itself can not determine, especially business news. Stock price is determined by bad or good news on companies’financial report, government policy, local/international economy, product, company merger and acquisitions, etc.
If it is good news of a company’s financial report in the quarters, bonus, new product or merger, etc, share price will go up quick. If it is a bad news of a company, share price will come down.
Rumors/sentiments will drive stock price or crash it. Investor psychology will either move or not move stock price.
How to Invest in Stocks as a Beginner
1. You need to understand the basics of the stock market as it is not enough, especially when you attend a seminar or webinar again or read course online again and again because it has roots. Or you need to understand the risk of the market or how it stock market works.
2. Choose one of the best stockbroking apps such as, Robinhood, InvestEngine, to read it to understand how it works.
3. Register with your personal information it after downloading it if required so.
4. Fund it with your Debit or Credit card. Then buy what to buy stocks for future appreciation. You must learn how to play smartly.
5. Participate in stock market community or WhatsApp, Discord or telegram on stock market guides to learn what to buy and what not to buy or follow their prediction on stock recommendations. Or learn continually to improve your trading strategies.
Can Stocks Make You Rich?
Yes. Stocks can make you rich. Read these case studies as an example:
Case Study 1: My name was Joe. I bought 100,000 units of stock from the oil sector at 2 per share on December, 2020 which costed me 200,000 and sold it for 15 per share which I make a profit of 1.5 million on February, 2021.
Then I moved to buy another stock of the stocks from the beverage sector for 10 per share with 1.5 million on April, 2021 after my skilful analysis and then sold it for 35 per share which I took a profit of 5.2 million. And I withdrew it into my account.
Case Study 2: My name was Joy. I bought one of the stocks at 1.75 per share from the breweries sector with 50,000 in 1995 and now grew into 10 millions of shares from 28000 units of shares in 2004 because I was given 1 for 1; 1 for 2; 1 for 4; 1 for 3, 1 for 5 and 2 for 3 bonus for 20 years. I was now a millionaire because I sold it at 38 per share for 380 million.
And stocks can make you a millionaire if you use exist-and-exit strategy daily, and if you are given bonus every year. Stocks can make you rich if you buy largest units of shares. Not all stocks can make you rich.
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