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Stock Trading - Investing in the Stock Market:For years it always seemed like the wealthiest of Americans invested in the stock market while the rest of us just got by. In the 1990's more companies granted stock options and started offering 401K plans so that their employees could be vested in the stock market and own stock in the company. Everyday stocks trade on the New York Stock Exchange, the NASDAQ, S&P 500 and many other stock exchanges around the world. Wall Street is famous here in the US for being the financial center of our country. Through mutual funds, the average American doesn't need $1000's to invest in an individual stock, they can invest in a "family" of stocks or funds with minimal investment. A stock broker at a brokerage house does the trading for you or you can get an account where you actually do the stock trading over the phone or online through secure websites.
How to choose a stock broker?Most people know very little about the stock market and how to invest their hard earned money, so they hire a stockbroker to help them allocate funds into various stocks and come up with a balanced portfolio. In recent years many brokers have been caught for unethical behaviors (insider trading, recommending stocks they own without disclosing that, etc) and so the public has become wary of hiring a stockbroker that may scam them of their money. Not all brokers are bad and it's up to you to pick the one that fits your needs and philosophy of the market best. Consider the services you are looking and your overall investment goals. Some brokers are more hands on while others focus on your financial planning skills and investment knowledge. Compare discount and full-service firms. Some fees are way too high for the services offered, so ask friends or co-workers who they work with to get an idea of what stock brokers in your area are good to work with. Meet with the prospective broker in their office to talk about investment strategies and how long they have been in business. Make sure you discuss compensation so that you are not surprised later at their fee structures and minimum purchase requirements. Use your best character judgement when making the final decision. All brokers are salespeople who earn commissions on your trading behavior so choose carefully.Stock Options - What are they?Stock options from your employer give you the right to buy a specific number of shares of your company's stock during a time and at a price that your employer specifies. More and more companies are offering stock options to attract and keep good workers as well as wanting their employees to feel like partners in the business. Startups tend to offer the biggest stock options (they are usually worthless shares to start) since they want to hold onto their cash. The price the company sets on the stock (called the grant or strike price) is discounted and is usually the market price of the stock at the time the employee is given the options. Since those options cannot be exercised for some time, the hope is that the price of the shares will go up so that selling them later at a higher market price will yield a profit. Unless the company goes out of business or doesn't perform well, offering stock options is a good way to motivate workers to accept jobs and stay on. Those stock options promise potential cash or stock in addition to salary. The vesting period is the amount of time before you are allowed to sell your stock options on the open market.
Stock Quotes and Researching Stocks:Many shrewd investors research stocks well before buying them and they get up to date stock quotes on a daily basis to track the stocks or mutual funds of their choice. You can get the latest stock quotes at Quote.com, a service offered by Lycos. Just type in the stock symbol and find out instantly what the stock is trading at. Other online sites like Yahoo Finance allow you to setup a portfolio with stocks and funds which you can track with their online tools. Forbes and CNN offer excellent market research tools and endless articles on stock investing and market trading. As for mutual funds, Morningstar.com is the most well respected site in terms of ratings of the best mutual funds. Learn about the top mutual funds and the best performers in each category. We have used Charles Schwab for years and they too have a great online stock trading and investing service as mentioned above.
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