Investing Basics – Types of Investments

A stock is actually an unsold asset on a public exchange. When you buy a company’s stock, generally you are buying a tiny piece of that corporation, known as a stock. The buyers of stock purchases these shares because they think that the corporation will be worth more in the future. When that happens, the stock of the company rises in price.


Now, what happens when the stock market is experiencing a rise? Well, it does not affect the everyday lives of ordinary citizens who just happen to be buying up shares of stock for the sheer fun of it. But investors who buy the stock are affected by fluctuations in the stock market. An investor may feel his or her net worth drop, depending upon what happens with the company that the stock is related to. So, it pays for an investor to be very educated about the stock market and how it affects everyday life. It would be much too easy for a person to get caught up in day-to-day trading and not to be aware of what is really happening in the world of stocks.

What most people do, when they are looking for a way to make money through stock market fluctuations, is they try to pick up company stocks that are doing well and put them onto the mutual funds’ or mutual fund that will supposedly allow them to make money with their investments. This sounds pretty sweet, but there are some huge risks involved in this type of activity. Read on to find out why….

First, there is little risk involved with value stocks, but there can be quite a bit of risk involved with growth stocks. Growth stocks are considered to be hot. This means that the share price is rising. Value investors tend to like growth stocks, but are wary of value stocks because they do not deliver a large return on investment quickly. Many value investors look to hold onto these shares until the price has bottomed out, at which point they decide to sell.

Growth stocks are good investments if you are able to pick them correctly. Growth stocks tend to rise during an economic boom. Investors who know what they are looking for or can hire a professional stock broker to help them choose and pick out certain companies, are often able to make good money this way. Two main rules apply to spotting growth stocks: you should buy during a bull market and sell during a bear market. There are some other types of stock that are considered to be value stocks, but these two are usually the best investments for this purpose. Other common types of stocks include blue chip stocks and emerging markets.

There are many different ways that people choose to invest in the stock market today. The most popular choices include mutual funds, value investing, growth stocks and riskier alternatives such as penny stocks and options. No matter what type of investments you are interested in, if you do your research you should be able to find a safe and secure place to invest. With the current state of the economy, it is hard to find any type of investment that offers a high rate of return.