There are literally thousands of publicly-traded companies in the United States. In addition to these, there are also many foreign companies in which Americans can invest. Among these companies are brand-new start-up businesses and old established names that are recognised world-wide. So the question one has to ask is what kind of business should you want to own?
Generally speaking, the newer businesses offer the possibility of rapid growth, along with greater risk. Old established businesses are safer, especially as long-term investments. But since many of these companies have matured, they are not growing as quickly as a start-up business. A lot of mature businesses pay dividends, which is just like receiving interest payments from your bank. This is a method they use to attract and reward their investors. However, the board of directors can increase, decrease or cancel their dividend payment at any time. But many companies boast of the number of consecutive years that they have paid dividends. A little research can show you which companies are the most reliable in this regard. Be careful when you find companies paying very high dividends, such as 8% or higher. Sometimes, a weak company needing to attract investors will offer high dividends. So be sure to look at balance sheets to find profitable, as well as dividend paying businesses.
New businesses can be the source of high gains, as well as big losses. These companies are more suitable for short-term trading than long-term investing. As with older businesses, the quality of new companies can vary from very risky to relatively safe. Again, research is the key to establishing your list of suitable investment-trading possibilities.
Most of your research can be accomplished on-line. Many of the Internet service providers have financial pages. I have used Yahoo and MSN and find them to be very helpful. There are numerous investment services on-line. But be careful about where you look. Some sites are just traps to get your email address so it can be sold to spam-mail solicitors.
An on-line pay-subscription can be useful in doing research as well as providing a means to keep your investment records in a computer format. My favorite is The Wall Street Journal, (WSJ.com). You basically pay to receive the computer version of the newspaper, and with it you get a number of additional services, including a helpful format to record and track your investment portfolio.
I recommend before anyone actually spends money to buy stocks they do a period of "pretend trading", or what is known as paper trading. You can select one of the computer trading platforms and begin to trade with imaginary money. You may decide after a period of paper trading that you are very glad that you are not using real money. But if you discover that you have a bit of success, you might want to start spending a little real money. Paper trading is a great way to learn the stock market at no risk, and can also be fun.
I have often wished that high schools would have courses in stock trading where each student was given $100,000 in imaginary money and then taught how to select stocks and establish portfolios. The students may never become real stock traders, but at least they would understand a bit of what they see happening in the financial markets. Most of the population has no idea how Wall Street works. In the media it is often cast as a villain out to cheat "Main Street" out of its hard-earned dollars. People tend to fear what they don't understand. As adults, everything we do revolves around finances, yet we enter into the working-world with virtually no knowledge of how the system functions. As a result, many people make poor decisions and suffer serious financial losses because of their lack of expertise.
Again, I want to remind you that I am not in anyway a financial advisor. I speak only from my personal experience. There are as many different opinions on investing as there are people. Mine is just one of many. So be sure to do your research and homework.
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