A Note On Investing And Investing Essay

811 Words Aug 2nd, 2016 4 Pages
Often the lay person who has a limited understanding of investing will lump stocks and bonds together when talking about investing in markets. While they do share some similarities, there are also significant differences one needs to be aware of, such as how the investment works, the outside forces that influence value, liquidity, and the markets where they are traded. It is also important to understand rates of return, so I shall include multiple examples using a stock with and without a dividend component.
Stocks are probably the most easily understood by the novice investor and are a market that is accessible by almost anyone. There are dozens of online brokerage services that make investing in stocks easy and convenient. To put it simply, a stock is also called a “share” because it is a fractional ownership in a company. It is a claim against the company’s assets. So what does this fractional ownership get you? Well according to Investopedia you get, “one vote per share to elect the board of directors at annual meetings is the extent to which you have a say in the company.” (Investopedia Staff p.4) But, and this is the exciting part, you also have the right to sell your share for a profit and possibly earn dividends for as long as you own the share. If the perceived value of the company goes up, so does the value of your share, and if the perceived value goes down, so does the value of your share. The word perceived is very important here because often the value of a…

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