We’ve all heard of stocks and shares and have a vague idea of what they are, but few of us fully understand what they are, let alone know how to buy them.
So, let’s find out the answers.
What are stocks and shares?
It’s no wonder people are a little confused about stocks and shares. Even Investopedia states that the distinction between stocks and shares is blurry.
Basically, both words, when referring to financial equities, are used interchangeably. They both refer to having partial ownership of a public company.
The main distinction between the two is actually down to syntax. The term “stocks” typically refers to having a slice of ownership in one or more companies while the term “shares” refers specifically to having ownership in a particular company.
For instance, if someone tells you that he owns shares, it means he has shares in a specific company. If someone tells you that she has bought a hundred stocks, she would be referring to owning stock in a number of different companies.
Either way, if you buy stocks or shares, it means you have a stake in the ownership of one or more businesses.
If you’re buying stocks and shares as an investment, you’ll typically have a portfolio of stocks and shares in a number of different public companies. This is known as equity investing.
You have the choice of buying a stake in a company directly or via a fund. The latter is a type of collective investment where your money is pooled with the money of many other investors; usually thousands of people.
When you become a shareholder in a company, you get to share in both the financial successes and failures of that company. Choose your investment wisely and you can better ensure your stocks and shares will bring you a profit.
You Can Buy Stocks Through an Investment Platform
One of the best and simplest ways for DIY investors to buy stocks is through an investment platform. Would-be investors can then access a range of investment opportunities. For instance, you can try sofi.com. The investing platform provides all-in-one investing that’s easy to use.
You can trade stocks and EFTs, invest in IPOs, and try out automated investing. You can even trade cryptocurrencies. If you’re new to equity investing, buying stocks and other investments through an investment platform is probably the easiest and best way to get started.
Consider Hiring a Financial Advisor
If the prospect of investing by yourself sounds a little daunting, consider hiring a financial advisor or wealth manager who can give you helpful advice. This can be a good option if you have a large amount to invest, such as when you gain a windfall or inheritance of six figures or more.
But even with an advisor on board, you’ll need to determine what kind of investment you want to make. You’ll also need to decide things like how long you want your money tied up and whether you want to avoid certain investments, such as with companies with no environmental principles.
Go with a Robo-advisor
We briefly mentioned automated investing earlier. This can be a good choice for some would-be investors, especially if you have a sizable amount to invest, such as $10,000.
A robo-advisor acts as a kind of middleman between the DIY approach and the approach of using a financial advisor.
You simply need to provide information, such as how much you earn, what your financial goals are, and your reasons for investing. Then, based on that information, the automated system will provide you with a readymade investment portfolio.