Current:Home > InvestBuying stocks for the first time? How to navigate the market for first-time investors. -MoneyBase
Buying stocks for the first time? How to navigate the market for first-time investors.
View
Date:2025-04-13 01:51:02
One way companies can raise money to fund their business is to sell stock to the public.
When people buy stock in a company, they're betting that investment will grow over time, along with the company in which they're investing.
As of May 2022, Gallup reports 58% of Americans own stock. One reason for this is the stock market’s increased visibility and accessibility, thanks to a number of trading apps like Robinhood, Acorns and more which have driven the cost of trading to zero and claim to make trading easier for the average investor.
If you’re a first-time investor or someone who’s just curious about the market, we’ve got the basic information you need.
How to buy stocks
If you’re saving for your retirement, it might be a good idea to open an Individual Retirement Arrangement (IRA), a type of account that gives you certain tax benefits while limiting the types of actions you can take and the amount you can invest each year.
According to the Charles Schwab Corporation, an important step to trading stock to which you want short-term access is opening a brokerage account. Taxable brokerage accounts can give you more flexibility and access to your assets without time constraints, with the downside being that any capital gains resulting from these transactions are subject to taxation in that tax year.
Once you’ve opened an account, you should do careful research before deciding which stocks you would like to purchase. There’s no one right way to invest, so based on your individual financial goals and the types of companies you’d like to support, your stock portfolio may look very different from others’.
Is a u0022soft landingu0022 on the horizon?:How the US economy could dodge a recession
What is a stock?
The words, “stock,” “shares” and “equity” all mean the same thing. They refer to a shareholder’s claim in a company’s assets.
In other words, owning stock is owning a small piece of a company. You even get voting rights for certain company actions that may need shareholder approval.
How do stocks work?
Companies sell stock when they need access to more capital. Then, as there is more demand for certain stocks, often because of a company’s success, the stock's price can increase, making your original investment worth more.
There are many ways skilled stock traders can determine precisely when to buy or sell shares to their benefit. In simple terms, you can generally expect your stocks to rise in value when the companies you invest in are doing well and to lose value when those companies are doing poorly.
Stock traders buy stocks with the intention of making a profit by selling them when they are worth more than their initial purchase price.
How to check stock prices
According to Forbes, one of the easiest ways to follow the general pulse of the market is to check popular market indices like the Dow Jones Industrial Average and the S&P 500. These market indices, which track the performance of selected groups of stocks, provide a window into the overall health of the stock market.
To check the prices of specific publicly traded stocks, the New York Stock Exchange (NYSE) and Nasdaq stock exchanges have search functions on their websites. Each publicly traded company is assigned a unique ticker, or some combination of letters or numbers, to identify its stock. You can enter the ticker or usually find the company's ticker using the search function.
Sites like MarketWatch also report on many popular indices and individual stocks in the United States, Asia and Europe, as well as cryptocurrencies.
How does inflation affect stocks?
Most equity sectors are typically hurt by inflation, but there are a few sectors that can beat these negative conditions, according to Vinovest, a site dedicated to wine investing.
In times of rising inflation, you should avoid investing in discretionary spending —things consumers don't need to purchase, such as expensive vehicles and other unnecessary luxuries, according to Vinovest.
You should also invest in the industrial and material sectors when inflation is high due to supply constraints and rising labor costs, says Vinovest.
There are, though, sectors that can grow even in inflationary periods. According to Vinovest, these are the safest investments to make when inflation is on the rise:
- Wine
- Real estate
- Energy
- Bonds
- Financial companies
- Commodities such as gold, agricultural products, oil and gas, soybeans and more
- Healthcare
- Consumer staples like food, hygiene products and other household items
High interest rates:Boom for fixed-income investments, but taxes may be a buzzkill
Just Curious for more? We've got you covered
USA TODAY is exploring the questions you and others ask every day. From "Why does my cat bite me?" to "When was the microwave invented?" to "What is inflation?", we're striving to find answers to the most common questions you ask every day. Head to our Just Curious section to see what else we can answer for you.
veryGood! (167)
Related
- Who are the most valuable sports franchises? Forbes releases new list of top 50 teams
- Missouri teacher accused of trying to poison husband with lily of the valley in smoothie
- Paris Men’s Fashion Week draws to a close, matching subtle elegance with bursts of color
- Watch this incredible dog help save her owner after he fell into a frozen lake
- Working Well: When holidays present rude customers, taking breaks and the high road preserve peace
- Indonesia’s Mount Merapi unleashes lava as other volcanoes flare up, forcing thousands to evacuate
- Congo captain Chancel Mbemba subjected to online racist abuse after Africa Cup game against Morocco
- Milan keeper Maignan wants stronger action after racist abuse. FIFA president eyes tougher sanctions
- 'We're reborn!' Gazans express joy at returning home to north
- Ohio State adds 2024 5-star quarterback Julian Sayin through transfer portal from Alabama
Ranking
- Former Danish minister for Greenland discusses Trump's push to acquire island
- Jordan Love’s promising debut season as Packers starter ends with big mistakes vs. 49ers
- In Pennsylvania’s Senate race, McCormick elevates Israel-Hamas war in bid for Jewish voters
- Michelle Trachtenberg Responds to Fans' Concerns Over Her Appearance
- What were Tom Selleck's juicy final 'Blue Bloods' words in Reagan family
- Travis Kelce Proves He's the King of Taylor Swift's Heart During Chiefs Playoffs Game
- Bishop Gene Robinson on why God called me out of the closet
- Iranian soldier kills 5 comrades in southeastern city where IS attack killed dozens, state TV says
Recommendation
Israel lets Palestinians go back to northern Gaza for first time in over a year as cease
Russia oil depot hit by Ukrainian drone in flames as Ukraine steps up attacks ahead of war's 2-year mark
Mega Millions winning numbers for January 19 drawing; jackpot reaches $236 million
Lions host Bucs in divisional round, aiming to win 2 playoff games in season for 1st time since 1957
Paula Abdul settles lawsuit with former 'So You Think You Can Dance' co
Sarah Ferguson Details “Shock” of Skin Cancer Diagnosis After Breast Cancer Treatment
Elderly couple, disabled son die in house fire in Galveston, Texas
Horoscopes Today, January 20, 2024