So you are ready to invest in your future? Sounds like a wise decision if you have the right plan in place. There are many ways to secure your future through investing. Investing online can seem a bit intimidating if you don’t understand terminology. The easiest to maximize on your investment is to know what your are doing. Important terms you need to understand prior to investing are described in this article. You will need to understand volume, market cap, price, and monitoring one year activity.
Volume is as exactly as it sounds it is the amount of share available at the time period. The best time to study the stock market is when it is closed. Some people get overwhelmed when there is live activity. When you study your chosen stock you can better understand the average volume per day the company offers. If you have a company which is in high demand it will be tough to buy stock in high volume.
Market cap is the value the total shares issued by the company. Example: If a company issues 1,000,000 shares at $10 then the market cap is $10,000,000. What does this mean to you? Well, if you have $10,000,000 at your disposal and all shares are available you will be able to purchase all shares. In plain English market cap is the most amount of money you can invest at that point in time as long as the shares are available.
Price per share is just that price per share. Example: If company A sell their shares $2.00 a share then that is the price. Most people have a misconception about investing especially beginners. Most beginners think if the price per share is too low then they will not make big money, but you are wrong. Example: If company A price per share is $2.00 and has a market cap of $100,000,000 and company B price per share is $20 and has the same market cap of $100,000,000; you will make more money with company A because company A is easier for the stock to double. In order for you to double your money with company B the stock will have to rise to $40 a share, but with company A the stock only has to rise to $4.00 a share. Example: Lets say both companies stock price rose to $40 a share in this instance if you bought stock with company A at $4.00 a share you will have made 1,000 percent return where as company B you would generate 200 percent return.
One year activity
When you monitor the one year activity you will be able to see what the company does during a certain time of the year. Monitoring the one year activity is a good way to make a sound investment. Most people often overlook the history of a company and follow the crowd. The one year activity is fresh enough to tell you what time of the year you will make money on investment.
When investing online it is best to start small. Brokerage firms such as ShareBuilder can help with this. When you call ShareBuilder they will answer most questions as if you were consulting with a professional investor. Good luck!