Investing in the stock market is one of the most popular ways to grow your wealth over time. It’s also a great way to support other companies and the economy as a whole. While it may seem complex, there are many resources available to help you get started.
A stock market is a marketplace that pairs buyers and sellers of stocks. Sellers can be companies that are offering their shares through an initial public offering (IPO), or, more commonly, other individuals who are looking to sell shares they have already bought. Buyers can be institutions like mutual funds, or retail investors like yourself. Transactions occur through a marketplace, called an exchange, where the bid and ask prices are transparent.
Investors purchase stocks with the hope that their price will rise, enabling them to eventually sell at a profit. The reasons why a company’s stock price may increase or decrease are complex and range from the growth of the company’s profits to the general state of the economy.
The stock market is a global marketplace, so what happens in one corner of the world quickly impacts the other. This makes it important to invest wisely and consider your risk tolerance. To help you, the SEC and FINRA (the securities regulatory authority) enforce strict rules to protect investors.