Understanding the Stock Market: How to Buy Stocks and other Stock Market Basics

Understanding the Stock Market:
How to Buy Stocks and
other Stock Market Basics

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Investing is an important aspect of anyone’s financial life. It’s a way to grow your savings for retirement, finance your children's college education, and earn extra income once you’re already retired.

But to many new investors, learning stock market basics and how to buy stocks is a daunting task. There are numerous questions that need answering. Our latest report will delve into the various aspects of investing, from defining your investment goals and determining your risk tolerance to detailing the various types of investments in the stock and bond markets.

Stock Market Basics

The first question is what types of investments are right for you. The answer depends upon your age and risk tolerance. One thing is for sure, however: with long-term inflation likely to average 3% or more per year, stashing your savings in taxable CDs paying 1% to 2% will not achieve your retirement goals. The only way to preserve the purchasing power of your savings and sufficiently grow your wealth is to take some additional risk and invest in the stock market.

Understanding the Stock Market

Over the very long term (30 years or more), we are confident that stocks will outperform fixed income by a wide margin. The fact remains, however, that stocks are much riskier than fixed income over the short term. Consequently, a 100% stock portfolio is inappropriate for all but the most aggressive investors, and even then should be limited to those who are still in their 20s.

For the rest of us, it makes sense to smooth out volatility with an allocation to fixed income of at least 20% of the investment portfolio. As one gets closer to retirement and beyond, the fixed-income allocation should be gradually increased and the stock allocation reduced.

Since a person can live well into one's 80s or beyond, however, a majority allocation to stocks of at least 50% remains necessary even after retirement. You must keep in mind that one's "golden years" can last for decades. Especially during a time when a regular employee paycheck is not forthcoming, stock investments are the only way to ensure that one is able to earn an average annual return large enough to overcome the ravaging effects of inflation to investor wealth over time.

Defining Your Investment Goals

Investors, from the beginner to the seasoned pro, shouldn’t enter into any investment without a particular purpose in mind. That purpose can range from retirement planning to saving for a child’s education to preserving existing assets or earning extra income. Often, you may have two or more goals to consider; in that case, you may choose a dif­ferent investment for each of your goals.

Before you make your choice, ask yourself these two important questions:

By answering these questions, you can identify the correct investment to match your financial needs, time frame, and personal approach to investing.


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How to Buy Stocks for Investment Success

In this new special report, Understanding the Stock Market: How to Buy Stocks and other Stock Market Basics, we present you with a detailed look at the fundamentals of stock market investing, including an easy-to-understand glossary of stock market terms. Remember, only stock market investing can provide you with the long-term after-inflation investment growth you need to build -- and maintain -- a comfortable retirement!

Here’s a sneak peak at what you’ll find in this FREE special report:

Understanding the Stock Market—Lesson #1:
Welcome to Investing

In chapter 1, jump right in and learn how to define your financial goals, timeframe and risk tolerance.

Understanding the Stock Market—Lesson #2:
Fundamentals

Next, get the fundamentals of stock market investing, how the stock market works, and how to buy stocks to achieve your short and long-term investment goals.

Understanding the Stock Market—Lesson #3:
Broker Basics

What’s the difference between a full-service and discount broker? This chapter cuts through the confusion and gives you the practical knowledge to decide which type of broker is right for you.

Understanding the Stock Market—Lesson #4:
Mutual Funds

Read about the many different types of stock mutual funds and how to choose which fund types are best for you given your individual risk tolerance and investment objectives.


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Understanding the Stock Market—Lesson #5:
Management Fees

Understand the nuts and bolts of mutual fund fees, including why minimizing management fees is critical to long-term stock market investing success.

Understanding the Stock Market—Lesson #6:
Exchange Traded Funds

Learn how stock market investing’s newest innovation -- exchange traded funds (ETFs) -- are different from, and in some way superior to, open-end mutual funds.

In addition to these lessons on stock market basics, you’ll also find out the difference between open-end and closed-end funds, how bonds can fortify your portfolio and much, much more!

So take your hard-earned cash out from under your mattress and put it to work for much higher returns! Simply enter your email address in the box provided, and we’ll send you an absolutely free copy of Understanding the Stock Market: How to Buy Stocks and other Stock Market Basics. If you sign up today, we will also provide you with a complimentary subscription to InvestingDaily.com's “Stocks to Watch” daily e-letter!

Wishing you investment knowledge and the wealthiest retirement possible,

The Investing Daily Team of Analysts

Investing Daily, a Division of Capitol Information Group
7600A Leesburg Pike, Suite 300
Falls Church, VA 22043


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