When you’re wondering how to get started in the stock market you’ll have quite a few questions that you’ll need answered. The stock market can be quite a complex and challenging thing to understand completely but as you go along it’ll start to make more sense. In order to help you get a firm grasp of this game called the stock market here’s a quick beginner’s guide that you can use when you’re first getting started.


Understanding stocks

Stocks give you a share in a company, which means that you are a part owner of it. Stock, equity and shares all basically mean the same thing since they are all representative of a claim on the earnings and the assets of the company.

As part owner of the company you are also given certain rights and privileges. You’ll have a partial claim to the holdings of the company and can be a part of the decision-making process for its future. Here are just a few of the rights you have when you own a piece of stock in the business.

  • You have the right to have a copy of the profit and loss statements and the annual report.
  • You will receive share certificates.
  • You have the right to receive any approved dividends.
  • You can inspect the company’s registers.
  • You may receive dividends, bonuses and other corporate benefits.
  • You are given the right to vote in the companies yearly general meeting.

Once you have bought a stock you’ll receive a stock certificate. It wasn’t too long ago when you would receive physical certificate that you could add to a real leather portfolio. Nowadays, with a new age of technology upon us, these certificates can be held in electronic form. They are much easier to trade this way since physical goods do not have to change hands at all.

Back when, if you wanted to do any trading you’d have to head down to your broker’s office and physically hand him the certificates. Now everything can be done either by phone or through the Internet, which is a lot better for you. It makes the stock market game much easier especially when you’re first learning how to get started in the market.

Understanding the different types of stock

Here’s a general rundown of the different types of stocks available so that you can identify them easily.

Preferred stock

When you own this type of stock you’ll be given a priority when it comes to the placement of the company dividends. Both institutions and individuals are able to purchase these types of stocks.

Common stock

These are stock shares, which means that the person buying them gets a certain amount of the company earning’s growth and dividends. The stockholder is also given voting rights in the company.

Unlisted stock

These stocks cannot be found in the stock exchange listings. They are usually bought and sold in the secondary market and can either be preferred or common stocks.

It’s important to understand these different types of stocks because you’re going to hear a lot about them in the future. In most cases people that are just getting their feet wet in the stock market are going to be purchasing common stocks first and then branch out into unlisted or preferred stocks. There are advantages to these unlisted and preferred type of stocks and you will learn about the benefits of each more as you get more involved with the market.

There is nothing wrong with purchasing common stocks and a lot of people just stick to them throughout their trading career. A lot of millionaires have been made on this type of stock and in some cases it’s a better buy. It all depends on the company that you’re looking at, it’s assets and its future potential. If you’re thinking of taking a risk on a company you’d be better off starting with a common stock purchase until you see further growth in the business.

Your broker can also make suggestions about the type of stock that you should be purchasing and it’s recommended that you take his advice when you’re first getting started. You’ll want to sign up with a reputable broker that you can trust that will be able to handle all of your activities on the market.

As well, you’re going to want to do some studying on your own about the stock market so that you can really get the hang of it. Nowadays the best place to look for a stock market education is on the Internet. There are literally thousands of different courses, books, classes and all sorts of training materials that you can get your hands on easily. When you need to know how to get started in the stock market learn about the different types of stocks and continue your education so that you can make your investments pay off for you in the future.