A guide on how to invest in the

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A guide on how to invest in the stock market
By Prashant Chainani
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What is a stock?

• A stock is that a stock is a certificate that
  shows you own a small percentage of a
  corporation.
• When you buy a stock you pay for what the company
  owns such as offices, different materials etc
• Advantages of having a stock is that if the
  company that you invest in makes a profit the
  price of your stock also goes up.
• Disadvantages, if the company goes in loses your
  stock price goes down as well.
• Stocks gives you a right to make decisions in the
  company that you bought stocks of, the more
  percentage you have the more decision power you
  have.

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What is the stock market?
The stock market is like any other market but in
a much more organized way. The stock market is
for the trading of the companys stock. The stock
market is the place where there is the
transaction of shares, where the shares are
bought and sold. There is a stock market almost
in every country, all of the listed companies are
on the stock market, a company can be in 1 or
more stock markets. An example of a stock market
is the New York Stock Exchange (NYSE). The stock
market is only buy and sell there is no if or
but, in the stock market there is no such thing
as if I would have sold this yesterday I would
have had more money but I couldnt because I was
too busy, in the stock market these excuses dont
exist. In the stock market it is more important
when you sell than when you buy, it is more
important when you sell because suppose when your
share is going down and you prefer to keep it
because you think its going up you can save money
but if your share is going down and you keep your
share because you think it is going to go up but
it goes down then you can loose a lot of money so
you have to know when to sell, but it can also be
that your share is going up and you get too
greedy and you think it is going to go higher so
you keep the share but is goes down and again you
loose money, like the case with Enron that
everyone wanted to buy their shares because they
went very high and then they declared bankruptcy.
In the stock market it is possible that no one
wants to buy the share you are selling and that
no one is selling the share you want to buy
although this is very rare but you can buy the
shares if you pay more than the market value.
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Types of stocks

• Common stock
• A common stock is very easy to explain and to
  understand. A common sock is a stock that gives
  the shareholder the voting right to make
  decisions in a company. As the name implies the
  common stock is the most common type of stock.
• Preferred stock
• Preferred stock has more priority than the common
  stock in the distributions of assets. Although
  most preferred stock do not have the voting
  right, but some preferred stocks have special
  voting power in some cases for example the
  issuance of new stocks or to elect directors
• .
• Dual class stock
• To explain and understand this type of stock is
  more complicated. A dual class stock is issued
  for a company with different classes which has
  different rights on voting. Each share have a
  different power to vote for.
• Treasury Stock
• Last but not least this stock is a share that is
  bought by the company back from the public, also
  very confusing to understand.

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Advantages and Disadvantages
Advantages Advantages and disadvantages are
very straight forward. The advantages are you
dont really have to work, if you are lucky you
can have double of what you had or even more, a
wide range of stocks to chose from. Over time
people usually make more money in stock than in
keeping it in the banks, investing in bonds and
other investments. You can buy and sell stocks
from your house you do not need a big office and
you get a part of the companys profit.
Disadvantages There are a lot of disadvantages
which are one can lose a big part of their money
invested, difficult to know how your share is
going to go, when investing, a lot of time is
needed to analyze company and reliability, no
real time to know when to sell or buy stock, in
other words you never know whats going to happen
and there is a lot of luck involved and a lot of
prediction needed.
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How to invest on the internet
First I am going to explain how to do it on the
internet. First of all you need to have a back
account and you need to apply for the service
which gives to access to check your bank
accounts, how much you play and then they give
you another password which is called an
electronic signature which you can also change,
this signature is to make sure you want to invest
in stock or withdraw money. They will give you a
password and a username but you can change these
things later on.
The website I went on to see how to invest was on
http//www.gruposantander.es/ (this website is in
Spanish)when you go to this website you go to the
particulares (in Spanish which means you are one
person not a company) and there you put in your
username and password. Once you have typed these
you will enter another page which you have to go
to the tab which says Mis Inversiones, you bank
account will appear and you go to the option
Operativos de valores then it gives you the
option of buying and selling in local markets and
in international market. After you chose then you
need to put in your electronic signature after
you put in your electronic signature you chose
which stock you want to buy, then you can chose
when to buy it in the sense I want to but the
stock when it reaches 10 euros and you can put a
limit for example 3 days if you want the stock in
three days but if it doesnt find the stock at
that price in 3 days then the order will be
cancelled. You can also buy it on the spot. To
buy shares on the internet you will have to know
the ticker of the company.
You can buy and sell stocks with whichever bank
you deal with, all you have to do is go on their
website and it will have very similar steps as
the ones I explained to you. There is one problem
though you have to be over 18 to do this but you
can always use one of your dads or any other
relatives accounts that are older than you.
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How to invest through a bank
The previous explanation was also through a bank
but on the internet, you can also buy stock
through a bank even if you dont have internet,
to do this you are going to need a bank account
with the bank you want to buy the stock through.
To buy the stock through a bank you have to send
them a letter that includes your bank account
number, what share, how much you are willing to
pay for each share, how many shares you want and
your signature to authorize the buying of shares.
Although sending the letter can be a little bit
of a pain because at the time when the letter
reaches the bank the share you wanted to buy
could have gone up or down, there are also faster
ways of doing this by sending the letter through
email or by a fax. When youve got you letter
ready you might be thinking who do we send it to.
Well, if you send it through a physical letter
you send it to any branch of the bank, and you
direct it to the branch manager or to the person
in charge of the buying and selling of the
shares, if you send it via email or fax, you
direct it to the same person. If you have a good
relationship with the bank you can even call them
giving your details such as bank account number
and identification number then you tell them from
which company you want the shares, the total
amount of shares and how much you are willing to
pay for each share. For this you also have to be
over 18 but the solution is very clear you can
always use one of your dads or any other
relatives accounts that are older than you.
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How to invest through a broker
A broker is a person whose job is to invest your
money in stocks which he has been studying and
think that they are going to make you money. A
broker charges you a percentage on your profit,
also they can charge you a percentage on what you
invest it depends on your contract. You can find
brokers on the internet or in advertisements on
newspapers yellow pages etc To invest through a
broker is the same as investing through a bank.
Although when you invest through a broker he
gives you advice on what you should invest but
its your final decision that counts. You send a
letter or call your broker give him your bank
account and ask him his opinion and tell him to
buy the stock he advises or the one you want, you
tell him the quantity and at how much you want to
buy it for. Brokers are usually for people who
have very little time to do research or who have
little knowledge on the stock market. For this
you also have to be above 18.
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Selling your shares
First of all you have to know when to sell your
shares that is the most important part. Selling
your shares is very simple, if you want to sell
them on the internet instead of putting the
option of buying you click on the option of sell
and then a list of the shares you own come up and
you can chose the quantity and what price do you
want to sell it at. If you want to sell shares
through a bank all you have to do is send the
letter or if you have a good relationship with
the bank you can even call them you tell them
which share to sell how many shares you want to
sell and for what price. When you have a broker
he advises you when to sell your shares all you
have to do is give him the approval or tell him
when to sell the shares. When I say you can buy
or sell your share for what price I mean that you
tell them I want to buy the share when it reaches
1 and it was 1.50 and you can chose the amount
of time you want to do this for example I only
want to buy the share in the time space of 1 day.
You can do the same for selling your shares.
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Stock market vocabulary
Ask price-Price the seller is selling the
stock Bearish-Investor who invest cautiously and
thinks stock market will go down. Bid price-Price
the buyer is willing to buy for. Bonds-A bond is
a fixed interest financial asset issued by
governments, companies, banks, public utilities
and other large entities. Bonds pay the bearer a
fixed amount a specified end date.3 Broker-A
broker is a person who deals between the buyer
and seller. Bullish-Investor who thinks stock
market will go up and invests largely Dividend-The
payment made by a company to the
shareholder. Downturns-Negative movement in the
stock market. Investing-To place money or capital
to get more money. You can invest in the stock
market. Securities-An investment instrument,
other than an insurance policy or fixed annuity,
issued by a corporation, government, or other
organization which offers evidence of debt or
equity.4 Share-A part of a company. If you own a
share you own part of a company. Shareholder-A
person or company that owns one or more shares in
a company that is listed on the stock
market. Stock-A stock is an inventory it is the
stock of something such as a stock of clothes or
a stock of cars. Stock market-A place where
stocks, bonds, or other securities are bought and
sold. Ticker-Symbol which is listed on the stock
exchange. 3 http//economics.about.com/cs/economic
sglossary/g/bond.htm 4 http//www.investorwords.co
m/4446/security.html
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Tips

• Now that you know how to invest here are some
  tips on investing
• Start small but think big
• Buy business that you think are going to be
  successful not stocks.
• Think for the future not present.
• Do what you think is best.
• Read a lot about the stocks.
• Invest in few stocks, better to have a lot of
  money in few stocks than have little money in a
  lot of stocks. Concentrate on your investments.
• Keep the investing simple, if you do not
  understand the company plans dont invest in
  them.
• Learn from other peoples mistakes.
• Think wisely when selling your shares.
• Invest in businesses which are managed by honest
  people.
• Invest in one zone. Your specialty such as a type
  of industry.
• Take your time in making your decisions.
• These tips are very simple and most of them are
  from a book called How Buffet does it. The tips
  are not very hard to follow, and it will help you
  gain experience and confidence when invest in
  great quantities in the future.

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Bibliography
www.sharetradingeducation.com/ www.offthemark.com
http//en.wikipedia.org/wiki/Stock http//www.shar
etradingeducation.com/default.asp?d100396p48114
http//www.nse.co.ke/download/investoreducation/W
HAT20IS20A20SHARE.pdf http//money.guardian.co.
uk/investments/shares/factsheet/0,,596027,00.html
http//money.howstuffworks.com/stock.htm http//ww
w.zeromillion.com/financial-services/stocks-tradin
g-advantages-and-disadvantages-by-tim-wreford.html
http//ezinearticles.com/?Stocks-Trading---Advant
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com/investing/common-stock.html http//newyork.cra
igslist.org/cls/245534052.html http//www.factmons
ter.com/spot/stockmarket.html http//www.ehow.com/
how_544_buy-stocks.html Stock Market Book, Dalal
Street Journals Stocks to Riches, Parag Parikh
Suresh Chainani (person who helped me) Mohan
Chainani (person who helped me) Karishma Chainani
(person who helped me)