Some of the world’s richest men invest a considerable amount of their financial wealth into the stock market. The stock exchange is a marketplace where the shares of different, publicly listed companies are traded. If you own shares in a company, you own a small portion of that company, and since the public’s money is involved, the Securities and Exchange Commission was formed. The job of the SEC is to ensure that companies use ethical practices, while trading their shares on the market. Companies receive hefty fines if they are found infringing upon the guidelines set by the SEC.
Every company needs to publish an audited set of financial statements, each year. The annual general meeting must also be held once a year, which gives the shareholders the option to elect directors of the board. Majority shareholders in a company obviously have a greater say, and can veto decisions made by the company. However, most people who trade in the stock market don’t generally trade because they want a majority stake in a specific company, but rather because they want to make money while trading in stocks.
Fluctuations in the Market
The prices of different stocks tend to fluctuate on a regular basis. The London Stock Exchange, which is also one of the biggest stock exchanges in the world, opens up at 8 AM in the morning, and closes at 4: 30 PM. Throughout the day, millions of shares are traded back and forth. Previously, trading on the stock exchange was done manually. People would bid on shares and brokers would lock in the trades.
However, everything is computerised nowadays. Your money is basically a digital number on the screen. Fluctuations in the stock market occur due to a variety of different factors, such as political news, government decisions, and microeconomic factors, like company deals and major announcements, all play a role. An astute investor is one who remains up to date with all relevant stock market news. Many people have been able to make millions of pounds, simply because they were able to leverage the information available to them, in order to make the right trades.
Profits
The key to making a profit in the stock market is to purchase a share when it’s at a low price, and sell it off when it reaches a certain peak. There are hundreds of analysts, and brokerage houses, that release detailed reports on different companies every other week. As an investor, you should also subscribe to financial magazines, so you will always have information available when it comes to making the right investment decision.
Investing money in the stock market is a great way to make some money on the side. If your savings are lying idle in a bank account, you should seriously consider investing in the stock market and put it to work. If you make informed investments, and are careful about which shares you buy, you can easily make a considerable amount of money, which you can then put aside for further investment, or as a part of your retirement fund.
