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How the stock market works?
Growing Your Money

How the stock market works?

I understand that some things might not be for everyone, but how can you be so sure about it, when you haven’t even tried it? Many people still believe that investing is something men in suits do for a living and it is not worth stepping into, especially if you do not own a degree in finance. From my point of view, investing is an important aspect of personal finance management and it is worth exploring and learning more about.

So what is a stock market?

There might be difficult explanations for everything in life, whereas, I prefer simplicity. So let’s talk about the stock market in a simple way. Actually, there are many stock markets, also called exchanges. You might have heard of Nasdaq and New York Stock Exchange (NYSE) – these are some of the best known stock markets in the U.S. And there are many more all around the globe. The first tip about investing is to choose a well known stock exchange and a reliable company to invest in. As any other market, stock market is a place where you can buy or sell goods. In this case, the goods are called stocks (or shares) and, by purchasing it, you get a piece of a company. The bigger the piece, the more value it holds of the total company value.

How does the stock market work?

Here comes a huge myth, probably initiated by movies and media, that stock market must be a physical place, dominated by men in suits. The technology is far more evolved now, therefore, there are virtual stock markets available in a few clicks. Actually, you can browse through the stock market and buy or sell company shares without leaving your desk. This leads us to the next question – how exactly the process of buying stocks works.

How to buy stocks?

In order to participate in a stock market and buy stocks, you need to have enough funds to invest (obviously) and a broker. For previous generation, this meant actually hiring a personal broker to ask advice and place bids in the stock exchange for you. We live in wonderful times, where technology allows us to open a brokerage account online and get easy access to exchanges all around the world. Although, I definitely advise to look closely into this and do not rush into any decisions. There are many options worth exploring, when it comes to stocks and investments, so better do your homework before dipping into it. Better safe than sorry.

In the long run, stock value tends to rise, so investing in a trusted company’s shares might be a great option to extend your budget or save for retirement. Some people enjoy the process of active stock trading, while others choose to act safely and carefully measure their decisions. I believe that investing is a great way to ‘employ’ your spare money, but it is important not to rush into any decisions and act wisely.

Paul Niklaus
Paul is a marketing manager at @ZuperBank. He's in love with marketing, standup comedy, and storytelling. In our blog, he shows you how to do the most with your money!
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