Investing in the stock market

There is no guarantee that you will make money in stocks. Making your investments pay off takes a lot of work. You need to follow the financial news, use the market indices such as the Dow Jones Industrial Average , S&P 500, and the NASDAQ Composite to watch market trends, and thoroughly research companies you want to invest in.

Ways to invest in the stock market

There are many ways to invest in the stock market. A few common ways are listed below.

Instructions: Click each way to invest to learn more about it.

When you invest in stocks, you’re investing in businesses. These could be small, medium, or large companies in the U.S. or around the world. Buying stock gives you part ownership in a company. That’s why you should only buy stocks in companies you believe in — and believe can do well. Each stock carries its own specific risks.

Risks and rewards

Money that is invested in the stock market can have a great potential for growth but stocks can be risky because their value can change from day to day. There are no guarantees of a profit.

Research before you invest

  • Research is critical to investing success.
  • Research before investing. Most brokerages offer research and financial news in addition to stock quotes.
  • Base your decisions to invest on facts, not emotions.
  • Be as objective as you can about the risks and potential rewards.
  • View “stock advice” about investments with skepticism. Do your research.Recent theoretical studies have already commenced the first step to link the financial market and
    the rate of economic growth; it is proposed that higher per capita income may affect many aspects of
    the economy and stock market performance. Gurley and Shaw (1955, 1960 and 1967) argued that
    financial development is a positive function of real income and wealth. This study supports the
    quantitative work of Goldsmith (1969) who discovered that, in most of the 35 countries investigated,
    both developed and developing, the ratio of the financial institution to GDP tends to increase with
    higher real income and wealth. This relationship between growth and financial system size is further
    supported by more recent evidence from the World Bank (1989). Much of the research within
    empirical studies concurs that finance is strongly associated with economic growth rate.
    Financial markets are today classified as bank-based or market-based systems. This division can be
    further exemplified by the Anglo-Saxon market-based models which are capitalist economies and
    allow for private investment and private ownership and the other, largely exemplified by Germany,
    which is the bank-based model that has been practised more widely by Eastern European countries.
    These latter are centrally-planned or, to be politically correct, communist economies (Hall and
    Soskice, 2001). The UK and US are market-based as these countries have similar long-term growth
    rates1
    . Throughout the world, the type of financial model practised by sovereign countries reflects the
    type of government as a regime in power. Many, Eastern European, Middle Eastern and African
    countries, including Libya, have practised socialism for a long time. However in the light of recent
    trends, and under the direction of the IMF and World Banks, many countries are now reforming their
    economies and gradually adopting capitalism, largely as a result of the failure of socialism and
    particularly in order to rescue their economies. In this context, the World Bank (1994, 1989) has
    argued for the establishment and promotion of stock markets in developing countries in line with those
    existing in developed countries.

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