When it comes to investing in the stock market, the first investment instrument that comes to mind is stocks. It is the name given to the valuable documents given to the shareholders of the equity capital companies to document their shares and partnerships.
In other words, it is also seen as one of the equivalent parts of a company's capital. Stocks also represent an ownership or partnership. Stocks do not have a standard return and their value varies according to the company's balance sheet earnings and investment decisions.
Institutions that can issue stocks are joint stock companies, limited partnership companies whose capital is divided into shares and institutions established by special law.
In short, after you own the stock of a company, you become a shareholder of that company in proportion to the amount of shares you have purchased.
Things to Know About Stocks
• There is no minimum or maximum limit for stock investment.
• You need to have a good grasp of the factors that affect the stock prices.
• Speculative stocks bring high returns, yes, but they are also high risk stocks.
• You should make sure that you have some investment experience before starting the stock market.
• Instead of a sector you don't know; You should choose the shares that belong to the sectors that you dominate or that you have an opinion on.
• Shares can be easily converted into cash; it is a liquid instrument.
Where to Buy Stocks?
Stocks are usually bought on stock exchanges. To buy stocks on exchanges, you need to work with a brokerage firm. The brokerage house will buy and sell stocks on your behalf and will do all the necessary transactions for you. These institutions can often be banks, brokerage firms or other financial institutions. First of all, after you decide to work with a brokerage house, you can contact them and make your stock purchase.
Investing in Stocks
Stock, which is one of the most used instruments for investing; It is a tool that makes money for investors if it increases in value and is held by investors for a long time.
The logic of investing in stocks; You can decide what you need to do by buying at a low price and being determined.
After getting to know the stock market, it is useful for investors who want to invest in stocks to know this instrument. You should have information about basic topics such as Stocks; As they are affected by the changes in companies and sectors, they are also affected by the country and world economy. For this reason, you should see the stock market as a whole and interpret the prices by considering all developments. By following all the data of the companies to which the stocks belong, you should research the balance sheet data such as profitability, the performances of the companies and their plans and projects for the future. You should monitor the information shared by companies to have an idea about the future of the stock.
You can have information about the future positions of stocks by using technical and fundamental analysis applied in financial markets. Fundamental analysis allows you to analyze the country's economy and sectors, while technical analysis allows you to obtain mathematical results about stocks.
One of the most important points that the investor should focus on is to determine a strategy. You should execute your trades with your own strategies, not with the strategies of other investors. Do not forget that your investment can be successful if the strategy you have determined is in line with your investment and stock expectations.
When you have information about the market and stocks, you will be ready to invest by identifying the instruments you have decided to include in your portfolio and developing your own strategy.
After obtaining all the necessary information to invest in stocks, you can open an investment account through a bank or brokerage firm. The investor, who correctly predicts the fluctuations caused by the decrease and increase in the stock prices, can make a profit by performing the buying and selling transactions at the right times.
Before investing in stocks, you need to know the stock market. For this, too; You should find answers to questions such as what is the stock market, what is it good for, what kind of transactions are made in the stock market, what is the logic of the transactions. Knowing the stock market well helps you to make more profitable investments by evaluating your savings better.
How Are Stock Prices Determined?
• The most basic factor in determining prices is supply and demand. Buyers and sellers determine stock prices.
• Stock prices are mostly affected by economic developments. Positive economic developments create positive effects, and negative developments create negative effects.
• The company; Company data, such as its financial structure, is a very important issue. It even requires a good follow-up. Because company data also causes prices to change.
• It is also important in which sector the paper company you own operates in. Positive and negative developments within the sector may affect prices.
• When we look generally, factors such as political developments in the country, global events, wars, terrorist threat, natural disasters may affect share prices.
Factors That Reduce Stock Prices
• Increased corporate debt and competition.
• Increase in sales.
• Negative changes in management.
• The increase in raw material prices.
• Lack of capital.
• Negative political and social events in the country.
• Times of crisis.
• Natural disasters.
• Inflation rise.
• Banks' policies.
• Increasing interest rates.
Factors That Raise Stock Prices
• Technological advantages.
• Capital increases with equity.
• The success of the people who manage the companies is directly proportional to the success of the company. Therefore, when management is successful, companies are successful.
• The positive development of the sector situation in which the company is located.
• Since the incentives given to the company by the government will facilitate the growth of the business,
Factors That Raise Stock Prices
• The more positive the economic data in the country, the higher the increase in stock prices.
• Important and major developments regarding the company.
• Expectations formed by investor's trust or distrust are among the factors that determine stock prices.
In line with these data, despite all the factors, it is possible to find stocks that are suitable for each investor's own wishes and portfolio. You can invest in low-risk stocks as well as speculative and high-yielding stocks. When the stock market is mentioned, stocks come to an investor's mind before other investment instruments and have an important place in the history of the stock market.
What are the Advantages of Stocks?
• Stocks are a liquid market. In other words, you can turn your financial assets into cash in the fastest way.
• Stocks, in other words, are a form of ownership. That's why they're so involved in the growth of a company.
• Owning stocks brings with it special rights. For example, you may have valuable rights such as dividend, voting right, priority right, right to information, right to participate in company management and participation in the liquidation balance of the partner company.
• You can become a shareholder of the company with the share right you have in proportion to the number of shares you will receive. At the same time, you can attend board meetings.
• Stocks are a spot market. This means; It is a financial product that you can buy whenever you want and sell in the market whenever you want.
• With the advantage of “short selling” in your stock transactions, you can save money when stocks go down after the stocks are short-sold, thanks to the lending market. The stocks that are replaced after the decline offer you the advantage of profitable trading.
How to Buy Stocks?
There are certain stages that investors who want to buy stocks as an investment tool should follow. These stages are respectively;
• Intermediary institution selection,
• Opening an investment account at a brokerage firm,
• Depositing money to the opened investment account,
• Giving the first stock purchase order,
• Place an initial stock sell order
will take place.
Brokerage Selection
The first thing you need to do, according to the order of “the way to buy stocks” mentioned above; is to choose your brokerage firm. There are many institutions that carry out brokerage activities in the stock market.
Opening an Investment Account
After deciding on the choice of brokerage house, the next step is to open an investment account in that institution. Opening an investment account, which is a very simple process; If you are going to open your account in a bank, it can be done from the branches of that bank, if you are going to open it in a brokerage house, it can be done online or physically from liaison offices. When opening an account in brokerage firms, you must sign the framework agreement and risk notification form. If this contract and form are signed, your investment account will be opened.
Framework Agreement: This agreement, signed between the investor and the intermediary institution, includes the general relations and provisions between the parties regarding the buying and selling intermediation. This contract is signed for once only when opening the investment account.
Risk Notification Form: It is a form by the brokerage house that explains in detail the risks related to the transactions that investors have made or will begin to do.
Deposit to Investment Account
After you open your investment account, you need to deposit money into the account you opened to trade stocks. You should keep money in your investment account equal to the amount of the stock you want to buy and the commission you are obliged to pay.
You can deposit money into your investment account by transferring money to an intermediary institution or, if you have received your investment account from the bank, by sending money from your current account. You can also consult your brokerage firm about alternative methods of depositing money into your account.
Placing an Initial Stock Purchase Order
You are ready to buy your first stock when you have chosen your brokerage house and completed the investment account opening by confirming the forms and contracts required for account opening.
After completing these stages, having a balance in your account equal to the share price you want to buy and the amount of the commission to be received will allow you to buy your first share.
Log in to your investment account through the website or application of your brokerage firm, and select the stock traded on the stock exchange that you want to buy. The stock you have chosen; If you are in the session hours, you will see the current buying price, if you are outside, you will see the last transaction price.
You can buy the stock with the purchase order you give to the intermediary institution. It is possible to place your buy order in two ways: Free price order and limit order.
Free Price Order: It is given when the stock you are about to buy is freely purchased at the price formed in the Exchange. For example; It means "buy" even if the share price is 12.10 USD or 15.05 USD.
Limit Order: It is given for purchases where the highest price you are willing to give for the stock you are about to buy is determined. For example; If the share price is 12.10 USD or reaches this level, it means “buy”, if it rises above it means “do not buy”.
Placing an Initial Stock Sell Order
If the price of the stock you have purchased reaches the target price you intend to sell, you can place an order to "sell" the relevant stock through your investment account. After the trade is complete, the profit you have made (if the profit has been made) will be visible in your trading account balance.
The way you bought the stock, you make the sale process in the same way. The buy order types we mentioned in the buy order are also valid for sales.
The sale made with a free order is realized over the instant price formed in the Exchange. For example; Even if the price is 12.12 USD or 14.28 USD, if you place a free sell order, the sale will take place.
In the limit order, the sale takes place at the lowest price you are willing to sell. For example; If the price falls below 12.12 USD, the sell order you placed before will be activated and a sale will be made at this price.
Stocks are investment tools that can provide very good profit returns when acted logically. However, there are important issues to consider when investing in the stock market. While you are on this path, it will be beneficial to pay attention to the following points.
What Should Be Considered While Investing in the Stock Exchange?
- Since the stock market is a risky investment instrument, trading here requires serious knowledge. Most investors are not competent and sufficient in this sense. For this reason, it is of great importance that you receive professional consultancy support from the financial institutions you work with when deciding which companies to invest in.
- What kind of investor profile do you define yourself in, first decide on this. Define your level of risk taking as “low”, “moderate” and “high”. After measuring the risk you can take, it will be revealed how much of your income and savings you will allocate to the stock market.
- When defining yourself, you should also reveal your maturity expectation. What kind of investor are you? Short, medium or long term? You must answer that too. Thus, you will have determined your strategy while investing in stocks. (All experience has shown that those who do not panic, who are patient and long-term investors experience the least stress in the stock market and make the most profits.)
- You must be constantly following the data on the world economic agenda and other agendas that may affect the economy, such as war, pandemic, drought, from “safe sources”.
- If you are a short and medium-term investor or if you intend to make a profit by trading, you should be a more strict market follower. You should follow the price movements of the companies that you invest in or that you plan to invest in, regularly and instantly if necessary. Making an investment decision without this follow-up will depend on luck rather than science and increases the risk that the result will result in loss.
- Investors are also known to be chasing "stock market tips" widely. Platforms whose reliability is controversial, such as social media channels and internet forums, should come to the fore in this regard. However, a conscious investor; When buying a company's stock, it should focus on the future profit and growth of that company. Thus, it can achieve “increase in value” and “dividend returns”.
Remember! To buy a share means to be a partner. For this reason, it is necessary to pass a very good filter to whom you will and will not be a partner with.
What are Dividend Stocks and How to Tell if a Share is a Dividend Share?
Dividend share is the payment of dividends to the shareholders of certain shares traded on the Exchange at regular intervals. It is possible to earn passive income with companies that distribute dividends. No company traded on the stock exchange is required to distribute dividends.
Companies distribute dividends for various reasons. The first of these reasons is to thank the shareholders who hold their shares. A second reason is to ensure that companies' shareholders retain their shares at all times.
Dividend Stocks are one of the most popular investment types recently. Dividend shares are stocks that distribute dividends monthly, quarterly, semi-annually and annually according to the company policy. These stocks have a slower growth rate than other stocks. Dividend stocks are investment instruments that can provide you with financial freedom in the long run.
What are the Issues to Consider When Choosing Dividend Stocks?
- When choosing a dividend stock, you must verify that it regularly pays dividends. There are many online platforms where you can track the dividend distribution rates of the stocks over the years.
- Personally, when I buy a dividend stock, I follow the dividend payments of that share for at least 10 years and the dividend distribution rates for those years. In order for a share to be called a dividend stock, it must have been paying dividends to its shareholders continuously for at least 10 years.
- Holders of these stocks must have sound stress management. Because in order to get a regular return from dividend stocks, it is to accumulate these shares as much as possible for at least 3-4 years. During this period, large fluctuations may occur in the stock market. There may even be times when you will see your money fall 50% lower. The important thing here is to continue on your way without panicking. In fact, dividend stock holders see the decline in the stock markets as a buying opportunity and they buy more when the stock ratios decrease.
- If you are truly a dividend investor, you should view the stocks you buy as if they can never be exchanged. If you continue to receive dividends for the periods you have determined according to your economic situation, you will realize how well you have done when the dividends begin to be distributed.
- In the first period, you may not be very pleased with the dividends distributed for your shares. It takes at least 3 – 4 years for the dividend of a dividend stock to satisfy you, and you should try to increase those shares during this time.
- Buying shares again with the dividends you received in the first years in order to increase your shares will help to increase your number of shares without incurring any extra cost.
- When choosing dividend stocks, be careful to invest in reliable companies that have been in the sector for many years.
- If you are a dividend investor, it would make sense to diversify your investment by creating a bouquet rather than investing in a single stock. Thus, you divide your risk. The maximum number of shares recommended for holding is 10.
Read :
Finally, it is a fact that dividend investing is one of the best ways to earn passive income. If you manage your portfolio correctly and take sensible steps, you can have a solid dividend income and enjoy early retirement within 10 years.
We hope that our information about the shares will be useful for you and we can help you to have an idea. Thank you for reading our article to the end. If you liked our article, we would appreciate it if you could add a heart to the heart icon in the lower right corner. You can write your opinions about the shares in the COMMENTS section below.
Best Regards….
Read :
Comments