The stock market is basically a place where people can exchange stocks and money. If you want to buy or sell a stock then all you have to do is to simple open up an account with a brokerage and then place the order.
Brokers match orders as they come in. If you want to buy a stock and place a trade the broker is responsible for finding a selling to sell you that stock and therefore allow you to get into that position easily. It might sound like it will take a while, but because stocks are so liquid the process only takes a few seconds.
So, now you know that the market is basically a place where you can buy and sell stocks. But what exactly is a stock?
Stocks are parts of the ownership of companies. For example say you want to own a part of Coke and say coke has 100 million shares of stock (I don’t know what the real number is). If you buy 100 shares of Coke you will own 100/100,000,000 of coke or 1/1,000,000 of the company.
Obviously with such a small amount of the ownership you don’t have much voting power in the company and you can’t play a major part in what happens with the company. But there is another benefit to buying stocks.
Just owning stock is a terrific way of building your wealth. A share represents a part of the company, so each stock is backed by the company and should be around as long as the underlying company is around. Also as the company grows your stock should also theoretically grow with it.
By getting into stock in strong companies that are likely to be around for a while and are likely to grow you are putting your money into something that is considered to be safe and will likely increase and build your wealth as time goes by.
Holding stocks has been a terrific way of building up one’s wealth in the past and it is likely to continue being a terrific way of building wealth in the future. If you have money lying around and want to know where to place it the stock market can be one place to consider.
If you are learning about stocks and still have questions please question them on this stock market investing questions page.
