Investing in the Stock Market Essay

3568 Words Jun 19th, 2015 15 Pages
Investing in the Stock Market

Matt Gonzales

Abstract

The purpose of this paper is to inform the average investor of how to make money in the stock market. The stock market should be thought of as a long-term savings vehicle. Investing in the stock market should not be associated with gambling. By investing in high-quality U.S. companies, the investor in a company profits along with the company. As a shareholder, when the company makes money, the investor also does. There are many ways to invest in the stock market, but it is my opinion that investing in mutual funds is probably the most appropriate way for the average person, without expertise in stock analysis, to make money. This paper plans to inform the
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The primary benefit of the IRA is that it allows whatever is placed within it to grow without being taxed annually. For our purposes here, we will stick with stocks. Both of these options are retirement vehicles that come with their own set of restrictions. The IRA comes in two distinctive types. The first is a traditional IRA, in which the individual is permitted to invest up to $5,000 annually into this account. Again, this can be in the form of stocks or stock mutual funds. The benefits of the IRA are that the money that is invested in this type of account, since it is classified as a retirement account with the Internal Revenue Service, will be treated differently than that of a non-retirement account. In a non-retirement account (the normal way that individuals invest), all capital gains from the sale of the stock are taxed at the time of sale. A capital gain is the profit that is gained by investing in the stock (Kraft, 2011). These are classified as short-term or long-term, depending on the amount of time that the investment was held. If it is held in excess of one (1) year, the investment is considered long-term. If it is held less than one year, it is considered short-term by the IRS. Short-term capital gains are taxed no higher than 28%,

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