If you’re tired of the pitiful interest rates offered to you by savings accounts at the moment, you might be tempted to invest some of your hard earned money into the stock market. But if you’ve never had any dealings with the stock market in the past and are afraid you’re a bit too much of a novice to consider it, where’s the best place to start? The answer is right here with our complete beginner’s guide to the stock market.
So where shall we start…? Well the stock market is a complex system for trading company shares and it’s actually made of many stock exchanges around the world. The main stock exchanges are the New York Stock Exchange (NYSE), the NASDAQ, the London Stock Exchange (LSE) and the Japan Exchange Group and within each stock exchange you are likely to find indexes.
What’s an index?
An index is a way of splitting up the market, partly as way of being able to measure it and report on it. On the London Stock Exchange (LSE) for example, you have the FTSE100 – an index composed of the 100 largest companies listed on the (LSE). You have the FTSE250 – these are the next 250 largest companies on the stock exchange and you also have the FTSE Small Cap which is anything outside of the top 350 companies. By measuring the performance of these groups of companies we can get a good idea of the state of the economy and this might influence how we make (amongst other things) investment decisions in the future.
Can I buy stock in any company?
No – not every company is listed on the stock market – only ones where the owners have taken the company “public” to raise funds.
What makes the market go up and down?
There are many factors that determine whether stock prices rise or fall. These include the media, the opinions of well-known investors, natural disasters, political and social unrest, risk, supply and demand, and the lack of or abundance of suitable alternatives. The combination of all of these factors creates a certain type of sentiment (i.e. bullish and bearish) and that will determine whether investors want to buy or sell their shares. If you have more sellers than buyers – the stock price goes down and conversely if you have more buyers than sellers, the stock price goes up.
What should I invest in?
Well, if there was a standard answer to that, we’d be millionaires. The truth is, everybody invests for a different reason. Everybody’s financial situation is unique and we all have different levels of risk that we’re willing to take. Investing is not for everyone, but over the next few weeks, we’ll be taking you through a range of different investment options to help you become better informed and understand whether the investment world is right for you.
An important step to make if you are considering investing, is to find an Independent Financial Adviser that you can trust to help you make financial decisions that are right for you. Here at Credius, we’ve got a great team ready to help so why not call us today on 020 7562 5858 or email us at firstname.lastname@example.org. We’d love to hear from you.