Do you want to get rich? If yes, then you should start accumulating wealth from now. So what if you didn’t born with a silver spoon you can work and make your child does.
You have to follow these three rules: Find a source of income generation, limit your expenses and then invest your money to grow it. Well, for the third rule, the best option available stocks. You can invest in stocks and double your money fast.
Stocks are security that represents his fraction of ownership over a company. It is a kind of investment where you buy a stock of a company.
When you buy a stock of a company you become its shareholder and the company shares its profits with you.
Types of Stocks
There are mainly two types of stocks:
– Common Stock
– Preferred Stock
It is the most common type of stock. And when a person says stocks he is generally referring to this only. Common stocks represent a fraction of ownership and the stockholder receives a dividend from the company’s profit.
Though this is one of the best ways to grow your money, it’s risky at the same time. If the company goes bankrupt or liquidates then common shareholders will not receive anything till preferred stockholders, bondholders or creditors get their share.
Preferred Stocks also represent a fraction of ownership over a company. But it doesn’t come with any voting rights and fixed dividends. This is more like debt than security.
One of the benefits of preferred stocks is that when the company will liquidate they will be given preference before the common shareholders.
How do you earn money through Stocks?
Ok, let us now see how will you make money from the Stocks?
When you buy a stock of a company, you buy a fraction of ownership of it. And then you can earn money in these two ways
– If the company’s value increases over time, the stock’s price also increases. And thus, you can your stock at a higher price.
– The company will also pay you dividends. But not every stock pays dividends and thus if you want to earn dividends then check out before buying.
Moreover, if you want to earn money through stock don’t do rash buying and selling stocks instead try Buying and holding stocks over a longer period.
Can stocks go up forever?
This depends on your question. If you are referring to your individual stock or a stock market then no. A stock cannot go up forever as a market is affected by inflation and deflation. If you over the curve, it will rise at some time and falls at another.
But if your question is: Does the stock market always go up in the long term? Then, yes Stocks go up forever over a long time in a stable economy.
Why stocks go up forever?
In the long-run stock prices are affected by these two factors: Inflation and technological advancement.
The value of money will increase over time due to inflation and thus the price of underlying assets of a stock market increases. And thus, the stock goes up.
With the advancement of technologies, the efficiency of a company increases and thus its value increases. And thus the stock prices will go up.
So what are you waiting for? Start investing in stock now. But be aware of the fact that it also contains some risk. A company value can also decrease and thus the stock price decreases and thus you will have to suffer losses.
It is a risky game where you can either earn or lose, but with apt information, you may increase your probability of winning.
Good luck! Happy investing!