Have you ever dreamt of owning a large company like Apple? With a market value of more than $2 trillion, the chances are strong that you will never own the whole company.
The stock market allows you to own a piece of it though! Companies like Apple, Amazon, and Facebook are a few of almost 3,000 stocks traded on the New York Stock Exchange (NYSE).
Read on to learn more about how stock trading works in practice!
Buying a Share of Stock
A share of stock represents a small ownership interest in the company it represents. For example, a stock like Apple has the ticker symbol, AAPL. This is the symbol you use to place an order.
16.929 billion shares of Apple stock have been issued by the company since it began being traded in 1980. If you were to purchase 50 shares of Apple stock today, you will only have a small sliver of ownership in the company.
Although your ownership interest will be small, you can earn share in the profits of Apple. Some of the ways you can do this are through the appreciation in the stock’s price and the payment of dividends by the company.
Deciding On a Brokerage Firm
The best brokerage account for you will be through a firm you trust and that charges only small amounts of fees for services. Some of the biggest brokerage firms are Charles Schwab and Merrill Lynch.
Some brokerage firms will charge you a commission on each stock trade (purchase or sale) that you make. Others only will charge you a small commission when you sell the stock.
You can enter many different orders for stock, exchange-traded funds (ETFs), and mutual funds by setting up an account with a brokerage firm. You can also perform research and find more info on the internet about investing!
Understanding The Ex-Dividend Date
To become a smart investor you need to have an understanding of the importance of dividends and what they represent. A dividend is a share of a company’s profits that are returned to a stockholder.
Some companies will declare these dividends quarterly, annually, or semi-annually. The ex-dividend date is the date that a stock begins trading without paying a dividend. For example, let’s say Apple declares a dividend of 50 cents per share made payable on July 1st to stockholders of record as of June 5th.
This means that you will need to own shares of Apple by the close of trading on June 5th so that you will be eligible to receive the 50-cent dividend paid for that quarter.
The Financial Benefits of Stock Trading
Investing in the stock market is a great way to benefit from the economy you live in each day. Stock trading also gives you the chance to build wealth and improve your financial situation above and beyond your income.
There’s no guarantee that you will earn a profit by investing in stocks. You should study investing and a particular company before you buy shares.
Are you interested in learning more about investing? Check out our blog section for other posts about business and personal finance!
