What is investing in stocks? Things to Know for Beginners
What is investing in stocks? There are probably numerous questions that come to your mind when you are interested in investment. One of them is the definition of investment and stocks themselves. Stocks are parts of ownership in a certain company. If you buy or have some of the stocks, it means you have a certain part of the company. Of course, you also have the claim whether for the wealth and income of that company. As the owner also, you have rights to speak out during the shareholders meeting, decide company’s policies, vote and dismiss the commissionaires and others. Based on those facts, being a shareholder is actually really beneficial. However, when there are benefits, the risks are also around. There are many things you must think about before deciding to invest.
What is investing in stocks? Know the Company at First
There are numerous companies around that offer you tempting investment. Sure, it is wiser if you consider many things before deciding to execute it. First of all, make sure you know well the reputation of company. If you love reading newspapers so much, you must already have a view which one the recommended company to be invested. Meanwhile, you must know as well some of them with problems during the time they are established. Learn also the financial report of that company. The company chosen must be really healthy and far from those problems. It is not bad to choose a small company rather than the big one particularly if you are still a beginner.
What is investing in stocks? Contact the Broker
There are many options of brokerage companies around. Yes, you indeed have to choose one of them before starting the investment. The brokerage company must be a member of stock exchange. Contacting some of them to compare the services given is relevant. Besides, it is important also to know the cost offered. In this case, you must know what you need well. A brokerage company which is good for others may not be like that for you if the necessities are different. More than that, acknowledge what you expect from the brokerage company. It is whether the company must only execute your orders or also take a role as your investment consultant.
Other Important Matters
After contacting one of the companies, there are some matters to pay attention. First, you must open a new account. In general, a brokerage company will ask you to sign a new account management. Make sure to learn the information stated in the documents particularly related to your rights and obligations. Explain honestly what the purposes of your investment and your financial conditions. Second, you must decide who will control the account. It can be as the owner or the company, known as Discretionary Authority. For the second option, the brokerage company will make the investment decisions based on its consideration even without share it with you about the price, type of stocks, and time. So, those are what you need to know from a question what is investing in stocks?