Friday, August 7, 2009

How Stock Investing Works

By Michael Swanson

The question of the day is whether investing in stocks is an idea that will work for you or not. If you compare stocks to bonds they have earned people more money in the past. As a stock holder you will own part of the business you have bought stock in.

You have what is called common stock, which is easily placed as the most common type of stock you will come across. The most popular choice of people to invest in stocks with no type of restrictions being placed on a person. Anyone can buy this type of stock.

You will become what is known as a shareholder in a company. Meaning you own part of the company for the money you have placed into this stock. When the business succeeds and earns more money the price for the stock will increase, and you will earn money.

As part owner of the business you also will vote in decisions that are made for the company. You will vote when the board of directors is placed together, and you may well have a huge say in which way the company goes in many decisions.

Stocks can come crashing down too, and you will lose you money in some cases. Imagine all those people who had purchased stock in Enron, they have no money left now. So you need to watch carefully if you want to invest in stocks.

There are different types of stock too. One of the examples can be a business that is family owned, but they need to find investors, they will put some of those shares in stock and allow it to be sold to the public. In those cases these shares may be said to be either a Class A stock or a Class B stock. To learn even more about stocks be sure to read up more online.

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