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Wednesday, February 4, 2009

Stock Market For Beginners

By Linda MARY

It is everyone's dream to enjoy a life of riches and that means earning enough and retiring. The only way you can earn that much is because of the fact that you ahve made good amount of moeny either by inheritance or by way of stock markets.

Making money via stock market will involve two things and these are either having a comany which is very very profitable and then you as a majority partner enjoy the fruits of labor or you can buy shares at the stock exchange and sell when the share price is high.

Start investing in a company you like on the stock market,once you own the shares you become the part owner of the company even through the part ownership may be only .002% of the company. But hey, you are still an owner and as you learn the stock market basics, take some risks, reap some rewards you can play bigger and become an owner of a bigger part of the company.

Before taking the plunge try to know how the stock markets work and what is the better way to invest in the stock markets. It takes some time and patience to understand and you will be a winner once you know how to play the game.

The understanding of the stock market is very simple. It is like that if you have ABC company and you want to raise money you simpley part with some fraction of the company. To part with some fraction you create something called shares for each company and those shares will represent each fraction and then you sell those shares at price.

Let us say you create 100 shares of the company , that means the total share capital of the company is $1000. Now ideally to maintain a majority shareholding XYZ company can sell 49 shares and still be a mahority shareholder.

Assuming you have $1 shares and 51 shares in a company ABC then you can sell those shares at a much better value than $1 value if the stock market thinks that the company is going to make good profits and they eare willing to pay you a higher pricer than the original value.

This is in simple terms what is a stock and what is a stock exchange.

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