Stock Investments are a type of investment wherein stock buyers, usually companies or individuals purchase stocks sold by other companies. These stocks initially have a certain value which may increase or decrease through time and by means of company operations. To achieve good Stock Investments, the value of stocks must increase so that an investor may earn more than what he actually spent.
Stock Investments are no simple matter that is why all investors require the services of a stock broker. Stock brokers may provide three different services to stock buyers and these services are referred to as "execution only," "discretionary dealing," or "advisory dealing." When handling Stock Investments through "execution only," the stock broker carries out the trading based on the instruction of the stock buyer for his investment. When handling Stock Investments through "discretionary dealing," the stock broker decides for the investor based on his expressed goal. Finally, when managing Stock Investments through "advisory dealing," the stock broker advises his client who decides on what to do with the stocks.
There are several factors that affect each other in Stock Investments. These factors are:
- The types of stocks
- The market indexes
- The prices of stocks
- The progress of different business sectors or industries
- The liquidity of stocks
These factors in Stock Investments may also be influenced by the behavior of investors, the real performance of the markets and the country's political situation.
How do Stock Investments work?
In Stock Investments, the stocks that are purchased by investors increase by means of successful and profitable company operations. When the Stock Investments increase in value, each stock holder or investor earns from the dividends of the company they purchased stocks from and may even be involved in decision-making and voting in companies.
The stock buyers hire a stock broker who manages the Stock Investments. Depending on the type of service the stock buyers and stock brokers have agreed upon, the stock broker trades stocks. When stocks with increased value are sold, the stock holder earns money. But when the stocks are sold at a loss, the stock holder may earn nothing or less than the stocks' initial value.
Why should stock buyers be involved in Stock Investments?
Stock Investments facilitate the financing of company operations without the company or business owner using his personal finances or capital. He is able to finance his business through Stock Investments using the stock holders' money. Furthermore, if he wants to use his money for other endeavors, the company owner may sell more stocks.
It is helpful for individuals to be involved in Stock Investments because it helps them to earn more without having to handle the stocks on their own. Moreover, depending on the Stock Investments, stock holders may be eligible to influence the decision-making for company plans by voting for the board of directors for that company.