Thank you to Carl James for sponsoring this post and contributing his insights.
Today we are shifting gears a little bit and doing a fun financial post, since it's been a hot sec' since I've done one of those! Recently, E and I have been all about getting our finances in order. We started looking into life insurance policies, and have been consistently maxing out our IRA's for the last few years. We have a stacked emergency fund and are ready to start investing!
But seriously, I feel BEYOND overwhelmed by the stock market & know I can't be the only one! Snapchat recently went public (meaning people like you and I can buy “shares” of it on the stock market), but I had no idea how to get started with it all and seem to have missed the boat on it a little. I decided to enlist a guest poster to break down this stock market for us confused millennials today:
The Stock Market – What Is It And Should I Try It ?
I know when I used to think of the stock market it was all suits yelling at one another in a chaotic room, with complicated calculations scrolling across screens and papers everywhere. Basically, the picture perfect scene of high stress… and I’m sure for some people it probably still is.
However in recent years the stock market has come on a long way. Today, it's more accessible to the average person than ever. For those who do their homework, the possibility still exists to earn you a small fortune without much work or time spent at all! So here’s what you probably didn’t know about the stock market…
What even is the stock market?
The stock market or stock exchange is where you buy and sell a little bit of a company, with the aim of selling it for more than you bought it. However like any business that company's success will go up and down which is where you have to be clever about when you buy and sell because your profit will being going up and down too.
A stock exchange acts as a marketplace for companies and individuals to buy and sell their stock to people who want to have a share of their company. Companies that list their shares on the stock exchange do so for a variety of reasons but usually for extra money for things such as:
- Starting a business
- Opening a new office/ Shop
- Buy more product
- Product research
How to trade on the stock market
Trading on the stock exchange used to be seen as only for big businessmen in suits but nowadays it really is accessible to everyone and more and more people are giving it a go, there are many platforms such as CMC Markets that allow you to trade using your mobile phone or tablet, and to be honest do most of the work for you !
Why trade on the stock market
Trading in this way allows you to do as much or as little of it as you like around your existing job and daily life. However, it's important to keep up to date with what’s going on around the world to give you the best chance at figuring out which stocks will do well (in other words, when it's time to buy or sell). People tend to find the stock market more appealing than putting their money in a savings account since the returns are better. A typical US savings account will earn you .01-.03 percent interest a month, and you'll rarely see a traditional savings account with an interest rate higher than 1.05% today. Historically, people who trade on the stock market see an average 7% return of their investing money. That's a big difference!