Stocks Basics

Buy stocks for retirement or to earn annual income
By Nathan Eidem, Writer 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.

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.
Try: 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.
Try: 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.
Try: 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.

• 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.