Hi there! If you’re reading this article, then that must be because you want to learn of Stock (equities) Market. The stock market is almost synonymous with investing but it is in reality only one of many options available. A big part of the stock markets popularity as an investment is the fact that a lot of people have become very rich over the years buying and selling stocks. In reality this is unlikely to happen and trying to make your fortune trading stocks can be very risky.
A far better approach would be to treat the stock market as an investment that will provide a good rate of return over the course of many years. Stocks should not represent your entire investment portfolio; they are too risky for that. Instead stocks should be a part of a well balanced investment strategy.
The stock market is the first thing that usually comes to mind when it comes to investing. Stocks are a piece of ownership or equity in a company. When corporations need to raise capital they sell stock and in exchange you get a tiny piece of the company. In order to facilitate the buying and selling of stocks a number of stock markets were created in which people could get together and trade their stocks. There are actually dozens of stock markets but when people refer to the stock market they are usually referring to the New York Stock Exchange.
Given how much people talk about the stock market you would think that it would be by far the largest financial market in the world, in reality it is nowhere close. Things like the foreign exchange market and the bond market are actually much larger than the stock exchange. The biggest reason that the stock market is so widely discussed is that it is the traditional source of wealth. A lot of people dive into the stock market in the hopes of making their fortunes, in reality this is unlikely to happen but there will always be people who will try.
Depending on how you treat the stock market it can be a very risky way to invest your money or it can be a very safe way to do it. The difference is really the difference between being an investor and being a speculator. An investor buys stock in quality companies and allows his money to grow at a steady pace. A speculator puts his money into far riskier companies in the hopes of a big return. Both are viable ways of playing the stock market depending on your tolerance to risk.
The stock market is one of the most popular investments because if done correctly you can consistently get returns that are much higher than you would get from a savings account or a bond. That being said it is not a good idea to put all of your money into the stock market, there is a risk involved. Ideally your portfolio should be well balanced and that should include stock.