The complicated stuff in life gets a little less complicated when you break it down into six basic questions: What, Why, Who, Where, When and How?
Stocks are an investment in a piece of a company. Also known as “shares” or “equity” stocks play an important role in many investment portfolios.
They allow ordinary people to build wealth and companies to raise money. People invest in stocks for a variety of reasons, but primarily, it’s to get a return on investment. When you purchase stock in a company, you’re literally investing in the success of that company. The goal is that over time, you expect to earn a return on your investment either because 1) the stock price goes up, or 2) the stock pays dividends to its investors.
The minimum age requirement to open an account varies state to state. Depending on where you live, you have to be at least 18 or 21 years of age.
The primary place stocks are bought and sold are on exchanges, such as the NASDAQ or the New York Stock Exchange (NYSE). Think of these exchanges as places where buyers and sellers are constantly trading goods of value – like any other marketplace.
You can buy stocks at any point in your adult life, but the longer you hold a stock, the more likely you are to realize long-term value.
There are a few options, depending on your situation:
In all cases, it’s a good idea to talk to a financial advisor, or consult a professional before investing in stocks.
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Investing involves risk, including the potential loss of money invested. Past performance does not guarantee future results. Neither asset diversification or investment in a continuous or periodic investment plan guarantees a profit or protects against a loss.