Giovanni Rigters - Stock Market Investing for Beginners & Dummies

Stock Market Investing forBeginners & Dummies

By: GiovanniRigters

Copyright 2018 by GiovanniRigters

All rights reserved.

No part of this book may be reproducedin any form or by any electronic or mechanical means includinginformation storage and retrieval systems, without permission inwriting from the author. The only exception is by a reviewer, whomay quote short excerpts in a review.

Table of Contents

ImportantDisclaimer

Thisbook is presented solely for educational and entertainmentpurposes. The author is not offering it as legal, accounting,financial, investment, or other professional services advice. Thecontent of this book is the sole expression and opinion of itsauthor. It is not a recommendation to purchase or sell equity,stocks or securities of any of the companies or investments herein discussed. The author cannotguarantee the accuracy of the information contained herein. Theauthor shall not be held liable for any physical, psychological,emotional, financial, or commercial damages, including, but notlimited to, special, incidental, consequential or other damages.You are responsible for your own choices,actions , and results. Please consult with a competent tax and/or investmentprofessional for investment and tax advice.

Introduction

It'stime to get serious about your financial life and start thinkingabout the future. No one can and should work their whole life; youstill want to enjoy life, spend quality time with your family andyour body won't let you work forever. Also, nowadays you cannotrely on a pension-like in the "good ole days".

So, it's up to you and no one else totake the steps toward building your wealth. The process is nothard, but you will have to pay attention and spend some timelearning about investing. There is no way around it.

There are many ways you can invest,and there are many different investment accounts on the market, butit is not too hard or complicated to weed through the investmentjungle. Its also highly likely that you will start enjoying it andtake it to the next level by investing in individualcompanies.

First, we have to start with thebasics of what stocks are and what the stock market is. Well delveinto how to make money and what to do if there is a market crash.Then well look at some common misconceptions and mistakes peoplemake in the stock market. So, follow along with me as we traversethis jungle on our way to paradise.

Chapter One: What AreStocks? The Easiest Way to Get Rich!

A stockis simply put a piece of a company. A stock represents ownershipand is an asset you can buy. The people who own these stocks arecalled shareholders.

Let's look at anexample . If youand your family are going to eat a pie or pizza that has 8 slicesthen everyone will get at least one piece or slice. Out of theeight slices, you get only one and your Dad gets two.

You got one/eight or 12.5%of the pizza and your dad got 2/8 or 25%.

Companies work the sameway , but insteadof 8 shares of stock, they could have shares of stock in themillions or even billions.

McDonalds has 797 millionshares outstanding. Walmart has 2.9 billion and Facebook has 2.3billion shares outstanding.

Shares outstanding is a term used to explain the total amount ofcompany shares on the stock market for shareholders to buy and sellamongst themselves. Shareholders can be people or different typesof institutions.

Also, you are not limitedby geography when investing, because you can buy stocks fromcompanies around the world. So, if you want to buy stocks fromcompanies in the Netherlands or even Brazil, you can.

One thing you need to payattention to is that there are two types of stocks on themarket , growthstocks, and income stocks.

Companies that see theirstock price rise fast, like technology companies, are growthstocks, for example, Facebook and Twitter. These are rapidlygrowing companies and any income they make is put back in thecompany for further growth and expansion.

Income stocks, myfavorite, are stocks that periodically pay their shareholders adividend. This is usually quarterly , but it could also be monthly , semi-annually orannually.

The companies that canafford to pay their shareholders' income are large well-establishedcompanies, like Procter & Gamble or the PepsiCompany.

There are benefits toowning both growth and income stocks. Growth stocks have thepotential to increase in value fast , but they are also more volatile and risky. Incomestocks, on the other hand, provide a consistent stream of dividendincome but the stock itself might not appreciate in value as fastas a growth stock.

For these two types ofstocks, there are also two different types of investors, growthinvestors, and value investors.

Growth investors love itwhen they see their stock price increase in value, also called acapital gain. They are also more willing to take on greater riskfor an even greater reward.

Value investors likeanalyzing a company's metrics and numbers and are willing to waituntil it's the right time to buy share s in a company. Value investors aregood at discovering great companies who are consistent performersand are likely to stay consistent in the future based on theproduct or services they sell in the market they are in.

You might be thinking thatto start buying stocks you need to have a ton of money or be amillionaire. That's not true at all, you can start by just buyingone share in a company.

While I'm writing this, Isaw that the Nike stock is being sold for $60, Coca-Cola for $46and Twitter for $21. Now, this is not an endorsement to buy thesethree stocks. It's just an example that you don't need to spendthousands to get going.

Now with the boringdefinition complete, let's look at how people get rich withstocks.

The four main ways peoplecan get rich are:

• capital gains

• dividends

• selling short

• options trading

The last t w o require a bit of skill and work andthey are not as passive as the first two.

Capital gains are when yourstocks gain in value. The beauty of this is that you do not performany physical labor it's all passive.

Let's say you bought 10shares of the $46 Coca-Cola stock on Tuesday so your stocks areworth $460. On Friday the stocks went up to $52.

Your stocks( capital ) justincreased ( gain ).Your investment is now worth $520.

So, your capital increasedby $60. Now if you owned 100 or even 1000 shares that $6 increasewould look even better.

With dividends you get richby constantly buying dividend-paying stocks, reinvesting thosedividends and you also enjoy the dividend increases from thecompanies themselves.

With dividends, it's moreof a Snowball Effect . In the beginning, your income is low, but after time itexponentially increases allowing you to live off your dividendincome without you ever having to sell your stocks.

Investing to get rich andwealthy should be your long-term goal.

Chapter Two: What is theStock Market?

The stockmarket is like any other market where buyers and sellers cometogether to trade in goods or services.

Think about the car market.You're the buyer who is interested in buying a new red car. Youwill head over to the car dealership where you are met by eagersalesmen. They show you the latest car models and after someback-and-forth, they convince you to put down some money inexchange for a new car.

The stock market or stockexchange works the same way, but instead of the car being theproduct it s shares of stock.

The two most well-knownstock exchanges in North America are the New York Stock Exchangeand the NASDAQ. It's on these stock markets that you can buy sharesin companies like Snapchat, Apple and Starbucks.

One of the main differencesbetween the New York Stock Exchange and the NASDAQ is that the NewYork Stock Exchange offers traditional trading and the NASDAQ iselectronic.