Beginner's Guide To Stocks And Bonds

Buying stocks and bonds is different from buying into any other investment. The stock market is a shaky shaky world; you never know what's ahead. You can be cruising towards riches one minute, when a terrorist attack (like 9/11) occurs, and all your money starts to tumble toward zero.

There is no magical list of stocks that is out there that you can just choose from and automatically start making money either. Wall Street is cutthroat; market makers and traders do battle every day from 8am until 3pm. It can be like a roller coaster ride.

The key is to learn as much as you can about whatever particular investment you want to go with. There are books and websites about stocks and bonds available to you everywhere. The problem with most people is that it all looks too confusing to them and they give up.





Here are the basics:

The stock market is an organized securities exchange otherwise called a "stock exchange" where transactions involving stocks and bonds take place. These stock exchanges include:

NYSE - The New York Stock Exchange

AMEX - The American Stock Exchange

NASDAQ - The National Association of Securities Dealers Automated Quotation System

These are the three major stock exchanges in the United States. These are where all the securities trading takes place.

Securities are investments that represent evidence of debt, ownership in a business, or the legal right to acquire or sell an ownership interest in a business.

The market's performance is measured in a number of ways. The most common measurement is the Dow Jones Industrial Average (DJIA). It is basically a group of 30 stocks with a daily average. Whichever way the stocks (as an average) move, affects the movement of the DJIA.

If the market is going up, you call it a bull market. If the market is going down, it's known as a bear market.

When you buy shares of whatever company you decide to buy, you are buying a piece of something that you hope will increase in value. Stocks are just investments that represent a piece ownership in a company.


If you wish to learn more about stocks in detail, I suggest you take things slow. One topic at a time. For now, go to www.investopedia.com for more information and questions. They include many different articles and tutorials for stocks and bonds and any other investment questions. They also have a Fantasy Investing Simulator Game that you can check out.

Click here to find out how you can find Doubling Stocks.


What About Bonds?

Bonds are what you call debt instruments. The issuer of the bond is promising to pay you (the investor) a specified amount of interest for a certain amount of time on your original investment. When the bond is fully matured, they pay you the principal plus the interest accumulated.

Think of it as an IOU. You are lending your money to a company or government for a specific amount of time and they are going to pay you back plus interest. Sounds like a pretty good deal to me!

The only itsy bitsy problem is that you have to remember one thing. When interest rates (from the FED) go up, your bond value goes DOWN. As interest rates go down, your bond value goes UP. The good part is that when your bond matures, no matter what, you get your money back. Phew. You won't lose out on any of your principal investment.


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