So, can anybody explain shares? if I buy: for exmaple 5 shares in google, and they go bust does that mean I go bust? Or what? Thanks
It doesn't means you go bust... shares never go bust (till the company is bankrupted).. Say you bought 5 Google shares for $100 a piece... it means u invested $500.. After a week or so.. the prices of the shares soars to $110, then your total investment is $550 (making a 10% profit).. you can then either sell them or hold them for a long time.. (depends if you are looking to make money in short term or long term).. However, if the the prices of shares falls to say $80.. then you are having a loss of 20%.. at that point if you thinks that the market will fall further, then you can book the loss (face the loss) or can hold for a longer time.. till the stock is in profit again.. hope it helps.. I am a daily trader and at a given time i have 15-20 stocks in my portfolio with total investment of Rs 1 Million or say $25,000.
Thanks, how do I get shares though? I wanted to buy a good amount of shares, I have much money to spend.
When you buy shares in a company, you become a shareholder or co-owner of the company. Your liability is the money which you invested in the company. A listed company or any incorporated company would have limited liability so if the company goes bust, the worst that could happen is that you lose all the money you invested in the company, they will not go after your properties.
So I just don't get how it works out that is the only thing. Example - 5 shares google $100 each If I sellthem at $200 each I make $100 profit? and then they go bust the person loses $100 worth?
You could buy shares through a stock broker. You will need to sign up for an account through them. On the internet, http://www.etrade.com is a popular online broker which you can consider.
You need to open an account with a broker, deposit your funds with them just like you do with your bank account and then buy some shares. I suggest you educate yourself first. Trading stocks or investing in them is not so easy.
Shares are essentially pieces of a company. So if the company does well, the prices go up. The historical average of the US stock market is about 10%. So, shares help you build wealth but won't necessarily make you rich overnight. If you bought 5 shares of Google when it first went public at $85 you would have spent about $425. Today, those same 5 shares are worth $2800. However, it is not easy to find companies that shot up like Google. It is an exception rather than the norm.
If you buy 5 shares of google at $100 per share, you will invest $500 (5 x 100). Assuming that the share goes up to $200 per share and you sell them, you will make $500. The buyer will pay $1000 (5 shares x $200) for your shares. If the company goes bust, the worst that can happen is that the buyer will lose $1000 that he has invested in the company. In reality, what happens is that all the employees, creditors, banks and IRS would be paid from the sell of the company assets and if there is anything left would be distributed amongst the shareholders in accordance to the percentage shares they own.
Yup.. It can be chaotic.. if you do things correctly then you can be next Warren Buffet.. else can be the next Big Beggar.. Stay away from F&O tough....
F & O = Futures and Options When you normally buy shares through a broker, you pay in full in cash. With Futures and Options, you pay a percentage of the share price (say 10%) which thus allows you to sort of buy more shares that when you can afford, if the share price goes up by 10%, you make 100% profit. If however it drops by 10%, you lose all your investment. With F & O, your investment liability exposure is bottomless. For shares, you can try e*trade http://www.etrade.com . Two simple rules here :- 1) Invest only what you can afford to lose 2) Do not sell what you do not have Investing in shares is not a sure-fire way of being rich. There is a lot of risk involved with it. There are a lot of factors which determine share prices.
In the past, you get share certificate but now most companies have done away with physical share certificate.
The term is Stocks and Shares. In today's context, the words are interchangeable. Technically speaking, when you say you own stocks, it is a generic term which is your total shareholders in all the companies you invest in. Shares refers to ownership of a specific companies.
If you have ever taken a gamble then shares is sort of like that apart from the risk is on you. In other words normally with a lottery, the machine that picks the draws numbers will decide whether your numbers would make you win or not. With shares, it's all on you. In other words you are the one that makes all the decisions as when you should purchase shares, when you should sell them, how many shares you should purchase, etc. The more you know about business, the way business run, the economy, etc. you can make millions from shares. The best way to learn is to play them pretend share trading games that are on the web.