Running a large business takes a lot of money. Sometimes, a large corporation wants the public to benefit from its growth, become sustainable, scale up to meet demands, and expand to more markets. To raise capital, the organization decides to go public by listing on the stock market.
The stock market is a global market where individuals can buy a share out of the company. Any individual who purchases the shares is a shareholder in the company.
A private company could also be forced to become publicly traded to make the finances of the company transparent to the shareholders. In the United States, for instance, the securities regulations mandate that private companies must go public when they have more than 500 shareholders or investors.
You might have been wondering why some businesses failed too early when finance is accessible through the stock market. It is simply because the stock market is only open to large companies with predictable and consistent revenues. An intending company has to file with the Securities and Exchange Commission (SEC), and the process by which a private company sells shares to the public for the first time is known as Initial Public Offering (IPO).
What is stock?
A stock is a fraction of a corporation. When you buy stock, you own part of the business.
Benefits of buying stock
- All investments have a degree of risk. However, investing in stock offers better yield in the long run.
- Stock is easily accessible on the stock market. You can buy or sell your shares online from your phone or computer.
- You can buy stocks with a small amount of money, and you can sell them at any time.
- Stock helps you to stay above inflation. For instance, if you invested $1000 in Tesla stocks in 2012, it would be worth $140,832 on September 29, 2022.
- Economic growth positively influences the value of your stock. When people have more money, they buy more products from businesses, which translates to more profit for the businesses.
- Stock is liquid, which means you can turn it to cash at any time.
What are S&P 500 companies?
The S&P 500 companies are the biggest 500 companies in the United States. The stock market index that tracks the stocks of the companies is called the S&P 500.
Some popular brands in the index are Apple, Microsoft, Tesla, Amazon, Meta (formerly called Facebook), and Bank of America.
Such brands have a market capitalization of more than $14.6 billion, and they are highly liquid, which means they are easily sellable due to the number of potential buyers that can acquire them.
If you are just getting started in the stock market, you have to pay attention to the S&P 500.
The following chart shows the fluctuation in Apple stock in the past 15 minutes.
How to trade stock
Stocks are available to everyone on the stock market. You can invest in stock through a stock broker. Compare a stock broker to a real estate broker who connects you to the seller of landed property and gives you professional advice. A stock broker gives you access to the stock market and guides you towards investing.
An example of a broker is Etoro.
What is Etoro?
Etoro is a multi-asset trading and investment broker that offers financial and copy trading services. It provides a social platform to interact and learn from experienced traders and investors.
The company was founded in Israel in 2007 and now has 10 offices worldwide, which includes the US, UK, Cyprus, Australia, and Israel.
The eToro platform has more than 20 million traders and investors from more than 140 countries, which makes it the world’s largest community.
Through the platform, you can trade or invest in more than 2,000 different financial assets, including stocks, fiat currencies, cryptocurrencies, ETFs, indices, and commodities.
Benefits of trading stock with Etoro?
- Etoro is regulated by several authorities, including FCA (UK), ASIC (Australia), CySec (Cyprus), GFSC (Gibraltar), FinCen, and FINRA (United States). That guarantees the security of your investment.
- The broker offers social investing that lets beginners follow the financial investment activities of expert investors, and use copy trading to replicate everything they do in real-time.
- Etoro provides training and demo accounts for beginners in the financial market; a demo account enables you to test buying and selling without risking your money. After training, you can open a live account.
- Etoro provides professional tools and a wide selection of financial instruments, including stocks, currencies, commodities, crypto assets, ETFs, and indices.
How to start trading or investing in stocks
You can start trading in stocks after learning in-depth about the stock market. Etoro platform offers you training and a demo account to guide you.
To get started, click here to visit Etoro.
