What Should You Know Before Purchasing Stocks?


Quick Answer

Before purchasing stocks, a person should be aware of other investment options, as investing in stocks carries significant risk. An individual should also know that selecting the right stocks requires a lot of research, and that different brokerage firms and portfolio mixes have different strengths and weaknesses, explains the Simple Dollar.

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Before buying stocks, an investor should consider other investment options, such as keeping money in a savings account, investing in precious metals or investing in real estate bonds, notes the Simple Dollar. Different investment options have different liquidity options and carry varying levels of risks and returns. Awareness of these options helps an individual make the right decisions. Investing in stocks comes with significant risk, and investors receive substantial returns on investment only over the long term.

To buy stocks, an individual must register with a brokerage firm, which executes buying or selling orders. Different firms offer different trading resources and charge varying amounts of trading fees. Investors should conduct comprehensive research of companies of interest before investing in their stocks because different stocks have different rates of return. Investing in a single stock carries substantial risk, and a person should look to minimize this risk by purchasing the stocks of several companies in different industries, reports the Simple Dollar.

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