Stock market investing can be a good way to put your money to work on your retirement. If you believe in a particular business, stocks provide a means of investing in it. By purchasing stocks, you are providing companies with capital for business operations. Alternately, if you need to raise capital for your business, consider going public and selling stocks in your company.

If a company does well, investments grow, and investors make money. Stock trading comes with some risk, and prices can range widely. The Internet has changed the face of trading, as more and more people are buying stocks online. Consider the following when mastering the stocks basics:

1. Purchase stocks listed on one of multiple stock exchanges.

2. Register with an online broker to begin trading stocks.

3. Get your feet wet by purchasing stocks with lower risk.

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Find stocks to buy on several exchanges

Stock market investment takes place on exchanges all over the world. Each market has different minimum listing requirements. Companies can be listed on multiple exchanges, in multiple countries.

I recommend: NYSE EuroNext is the largest exchange group in the world. The group has numerous markets on which to get listed. NASDAQ is the largest electronic market in the United States, with more than 3,200 companies listed. The number of stocks traded in a day is usually highest on this market.

Use an online broker to purchase stocks from any location with an Internet connection

There are several online brokers from which to choose for your stock trading. These companies offer similar services, but some have more advanced options available, while others charge lower fees. A flat fee is usually charged for each trade, purchase or sale made on an exchange. Orders of large numbers of shares may incur additional fees.

I recommend: Zecco Trading is an online broker with low trade commissions. Receive 10 free trades per month with a minimum account balance. E*Trade is one of the most popular brokers on the Internet. The company's services allow you to trade in U.S. markets or in one of several international markets.

Protect your investment while you learn by purchasing stocks with lower risk

Two of the safer bets in the stock market are dividend stocks and mutual funds. Dividend stocks provide an avenue to invest in the stock market that can pay in multiple ways. These stocks can grow in value over time, but also pay a dividend yield to all shareholders. Mutual funds are investment companies that have assets invested in a variety of stocks, bonds and other financial instruments. Because of the range of investment types, risk is spread.

I recommend: Dividend Detective maintains a list of high-yielding dividend stocks. Access the list of 800 big dividend stocks, which have been pre-screened to meet yield criteria. MarketWatch provides a tutorial to learn how to invest in mutual funds. Click through the pages to learn more about the various types of funds available and how to invest in them.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  It can be tempting to invest in a company with a lot of buzz on a hunch. Before investing in stocks, however, you must do your homework. Make sure a company is financially sound and has earning potential before investing your hard earned money.

Owning stock, or 'equity' in a company lets you share in its future — for better or worse. As a stockholder, you participate proportionately in a company’s profits, or pratfalls. The tradeoff for accepting stock market risks with your hard-earned cash is long-term gains that outshine all other broad investment categories. Day-to-day, however, the 'stock market' (actually many markets worldwide) is a scary place where small investors compete alongside giant institutions. 'Wall Street' may be its best-known address, but London, Tokyo and other financial centers play, too.

Information and the right attitude are critical. Investors who 'do their homework' have a far greater chance of success. And those who take a long-term view rather than chasing today’s hot stock or trend will reap greater rewards.

At its simplest, the road to stock ownership has just two parts: A) What to buy, and; B) How to buy it. But down that road lie many choices and potholes. You’ll need to know:

     1) Whether you are best suited to buy individual stocks directly, or should consider 'mutual funds' which offer smaller investors an easy way to buy shares in a broad basket of stocks managed by pros.
     2) Where to find info and recommendations on the thousands of stocks and funds to consider.
     3) Whether to make your own investment choices and trades, or pay for advice and services from a full-service broker.
     4) Some stock pricing, value and risk-measurement basics, such as price-earnings (P/E) ratios, betas, dividends and yields.
     5) The difference between owning stocks inside a tax-sheltered retirement plan — IRA, SEP, 401(k) — or in a standard account.
     6) Strategies for balancing a portfolio, dollar-cost-averaging and selling.
     7) Whether you are financially and emotionally suited to use ultra-high risk strategies such as stock futures, options and day trading that can wipe out 100% of your capital.

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Become a more effective lifetime investor

Knowledge is everything in stock investing. (Well, luck helps too.)

I recommend: Better Investing is the largest nonprofit group dedicated to investment education, with over 50 years of service. Annual dues ($79) include online stock and mutual fund analysis tools, data from Standard & Poor's (S&P), a 'Getting Started' course, Better Investing Magazine, local chapter support, stock purchase plans and discounts on investor tools. Great way to get stock market savvy on P/E ratios, betas, retirement plans and more. Youth membership (18 or under) is $39. Excellent stock investing books and software packages. Investools is another helpful investor education site, offering a variety of stock investor courses, workshops, trading tools and more.

Plug into the stock investing info stream

Stock information -- including research and buy/sell recommendations geared to individual investors -- is available from many sources, including websites, TV, newsletters and magazines.

I recommend: For beginning investors, Money (including CNN-Money), Smart Money and Kiplinger's Personal Finance are great choices. Barron's (owned by The Wall Street Journal) writes to a more sophisticated investment crowd with excellent insights. Morningstar is an 'A-List' provider of independent research for individual investors (as well as financial advisors and institutions), including a variety of stock and mutual fund publications, websites and software. The Value Line Investment Survey and Investor's Business Daily are nectar for stock data junkies. MarketWatch (online service from Dow Jones), CNBC (cable channel and website) and InvestorGuide all offer investors a wide range of helpful information.

Navigate the stock newsletter jungle

Hundreds of investment newsletters compete for the attention of people with money to invest, although quality and results vary tremendously.

I recommend: The best single resource is The Hulbert Financial Digest which tracks investment newsletter results so you can see which ones are delivering. Two of my personal favorites are The Motley Fool group of newsletters and websites, and Profitable Investing from Richard E. Band, an experienced pro who's 'been-there, done-that' in all market circumstances.

Pick your investment & brokerage account providers

Your choices include major banks that offer brokerage account services, discount brokers, full service brokers and mutual fund companies.

I recommend: If keeping your finances in one place is important to you, try investing via your bank. Not all banks offer brokerage account services. A few that do include majors like Citibank, Wells Fargo, Bank of America, Chase, Wachovia and others. Discount or 'premium discount' brokers, including Charles Schwab, Ameritrade, Scottrade, TradeKing, FirstTrade and eTrade can all provide the accounts and tools you need to buy and sell stocks with low commissions. Full service firms include big names like Merrill Lynch, Edward Jones, Morgan Stanley and A.G. Edwards. A few top mutual fund families include Vanguard, T. Rowe Price, Fidelity and American Funds.

See our other stock investing How-To Guides

How-To Guides on Work.com and Business.com can help you locate all the tools and resources you need to be successful at investing in stocks.

I recommend: Other top-rated How-To Guides on successful stock market investing include: Stock Trading: Success in both bull and bear markets; Stock Quotes: Free online stock quote services abound. And add-ons can dazzle; and Online Stock Trading: Trading stocks is fast, simple and cheap. Here's what you need to know.

Stock market investing is based on future expectations for the performance of companies. Various strategies exist for stock holding and trading, but sound strategies are based on solid research. Today, all the research you need is available on the Web. Companies post their data and reports online, and the SEC even posts stock filings on the web.

The Internet has become an invaluable resource for those involved in stock trading. There are both free and fee-based websites offering expert advice. With so much stocks information available on line, you must beware of scams! Anything that sounds to good to be true, most likely is. Look for recommendations on blogs and in news articles. Always do your research before buying stocks online.

The following suggestions will help you to keep track of stocks news and trends:

1. Monitor the prices of stocks using interactive charts.

2. Stay current on all of the stocks in your portfolio with blogs and forums.

3. Study reports before you invest in the stock market.

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Track changes in the prices of your stocks with online stock charts

If you invest in the stock market, you'll be most concerned with one thing: stock price. Whether you are a long-term investor or a day-trader, you will want to monitor prices over time to know when to buy and sell. Knowing how to read stock market trends will help you to make smarter investments. Stock charts are readily available online and often allow you to monitor stock trends in real time.

I recommend: StockCharts provides both free and fee-based charts for monitoring stock price. Select from a range of chart styles and choose which types of indicator data you want included in your monitoring charts. Register for a free account with Big Charts, an interactive stock charting service, to save your preferences between website visits.

Get up-to-date information on all of your stocks with blogs and forums

Expand your knowledge of the companies in which you invest by reading blogs, and by sharing information with other investors in online forums. Being an informed investor who stays ahead of stocks news and trends will help you maximize return on your investments.

I recommend: Stockblogs.com is home to several authors who focus on different aspects of stock trading. Sign up for a free account to receive XML feeds of your favorite blogs. StockTradingToGo.com provides an online discussion forum for those interested in the stock market. Join in on an established discussion or start a new topic.

Do your homework before making a stock market investment

Monitoring prices and staying current on the latest news are important components of stock market investing, but are not sufficient on their own. Research reports provide in-depth analysis of stocks and sectors of the economy, and you should incorporate reading them into your investment homework regimen.

I recommend: Morningstar offers over 2,000 stock analyst reports for free. Paying the membership fee will get you expert stock picks and an analysis of your portfolio. Zacks Investment Research provides a range of research reports and guides on numerous companies and related investment topics. Sign up for a free account to get started with your research.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  With so much stocks information available online, it's a good idea to bookmark the stocks news and trends sites you find most useful, as you will want to use them time and time again. Even though you will have your favorites, be sure to stay on the lookout for new sources. Staying current on your stocks will pay off in the end!

Investing in the stock market can be financially rewarding during a bull market, when stock values are on the rise and investors are becoming increasingly wealthy over time. However, things are a little different on the flip side of a bull market, when stocks fall into negative territory and the bear market takes hold. During these times, investors often hope that they can at least tread water and wait out the downturn, without losing too much of their investment.

Anyone who is currently invested in the stock market or is thinking of investing, should have a clear understanding of the following common stock terms.

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Stock exchanges

Stock exchanges are corporations or businesses where stocks, shares of stocks, and a variety of other securities are traded. In addition to providing a physical or electronic location for trading to occur, these exchanges also provide mechanisms for the exchange of money.

I recommend: Investor Words provides a definition of stock exchanges as well as several related terms, including various types of stock exchanges.

Dollar cost averaging

Dollar cost averaging is a regular investment of a fixed dollar amount in a particular mutual fund or other securities. When the price of shares are high, the investor will purchase less shares. When the price is low, the investor will purchase more shares over time.

I recommend: Cash Money Life outlines the benefits and drawbacks to dollar cost averaging.

Dividend stocks

Dividend stocks are a particular type of stock that pay the share holder with additional shares of stock instead of cash. For instance, if a company issues a stock dividend of .1 shares per every one share held, then a share holder with 10 shares of stock would receive one additional share whenever stock dividends are issued.

I recommend: Investopedia provides a detailed explanation of dividend stocks and offers links to more information.

Mutual funds

Mutual funds, like stocks, are a way for individuals to invest in the stock market. Investment companies choose several stocks for the mutual fund's portfolio and purchase them with investor's money. The performance of the mutual fund is dependent on the collective performance of all stocks as opposed to the performance of one stock.

I recommend: The U.S. Securities and Exchange Commission thoroughly explains mutual funds, including how they work, factors to consider, how to avoid pitfalls and what to do if problems emerge.

Bear market

A bear market is a constant downturn in a market over an extended period of time and can last for years, such as in the most famous bear market which lasted from 1929 to 1933. Defining a bear market, however, is much easier than recognizing when it actually occurs. Several indicators can suggest that a bear market is happening including low employment rates, but failing investor confidence can ultimately turn a sluggish economy into a true bear market.

I recommend: Street Authority details various aspects of a typical bear market.

Bull market

In contrast to a bear market, a bull market indicates a constant rise in the market over an extended period of time. Bull markets occur when demand stays higher than the typical amount of supply would dictate. Rising investor confidence can cause more and more investors to begin investing, creating a situation where demand for securities stays higher than normal.

I recommend: My Stock Market Power provides additional information about the bull market, detailing the most recent bull markets in American history.