What is the stock market?

For me, investing doesn’t (at least not yet) look very different from basic saving either.

I am not currently buying separate shares but investing in them through funds. My account leaves a monthly direct debit to a cost-effective fund.

I don’t usually even think about the whole thing, let alone track my investment returns.

Well, can this now be called investing?

True damn it can.

Isn’t the stock market a place for rich people?

In this statement, the cause and effect relationship is confused.

The stock market belongs to everyone, whether we were hairdressers, film producers, tradenomists, baristas, doctors, high school students, bloggers or kindergarten teachers.

I thought in this post to open up a little bit of what the stock market is.

The stock market is the place where shares are sold and bought

The stock exchange is a public trading venue to which everyone has access. More often than not, we talk about the stock market, we talk about the stock market. That is what we are talking about now.

The stock exchange buys and sells shares of listed companies (and more, but today we focus on those shares).

Listed companies (listed companies, listed companies, same, same…) are large public limited companies that have listed (listed, listed, you get it…) their shares on the stock exchange.

A stock is a small piece of business. Once a company is listed on a stock exchange, anyone can buy, own and sell its shares.

Stock trading on the stock exchange is public, which means that prices are always visible to everyone. There you can’t buy shares directly from a friend, under the counter or wedge in the cash register. The same rules apply to everyone.

Here’s how it goes:

When you buy a stock, you invest your money in the business of the company. If the company succeeds, the value of the share will increase. If a company goes worse, the value of the stock will go down. So in a very simplified way, in reality, the value of a stock is affected by many factors.

However, you can’t lose more money on the stock market than what you’ve invested there. Even if a company runs into financial difficulties, you will not be the most expensive.

And where is the stock exchange physically located? How are those shares traded?

If you want to buy shares, you need a book-entry account where the shares are kept. You can open a book-entry account in your own bank or in a separate investment bank.

The bank from which you acquire a book-entry account will act as your stockbroker. Stockbrokers’ prices and selections differ, so it’s worth checking out. I will address these in more detail in a separate post.

Well, once the book-entry account and the stock broker are found, you can buy the stock yourself.

If you want to buy a stock, you submit a buy order to the broker. It indicates which stock you want to buy and at what price. If, on the other hand, you want to sell a stock, you submit a sales order to the broker with the same information. When prices meet, trades are created.

Huh! You go girl if you stayed here until now.

This was a scratch on the wonderful world of the stock market (eh). In future postings, I will also give more practical, step-by-step instructions on how to open a book-entry account and buy stocks and funds.

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