People often wonder what are basic stock market concepts? This term can be confusing, but for our purposes these are the methods under which you would invest.
Whether you are working with an online broker or a personal broker, one of the first things that they would want to know about you is what is your knowledge about investing and don’t make the mistake of not being honest about your experience.
Basic Knowledge Stock Market
The goal here is not only to make money but how much risk can you afford to take while doing so and in order to do so is to we must define your basic knowledge of the stock market. Now there are 4 main ways of investing in a stock market and sometimes people refer to this as risk tolerance.
The 4 approaches are aggressive growth investing, growth investing, income investing and capital preservation investing and every person is unique in what they need and desire so the combination of how soon you need the money or the risk you can afford to take really defines where you stand in regards to this basic concept.
Let’s look at each of these approaches carefully. First, in aggressive growth investing it is exactly what it sounds like. It is rapid growth with high level of investment risk. These are typically stocks which are lucrative but are also the most risky. Now in growth investing, it is a step down from aggressive growth investing.
This is for those who want to gain significantly but also want to preserve their investment. This is more suitable from those who are more patient with their investments but there will be some difficulties along that course of time. Next, let’s take a look at income investing.If you want to see your income from your stocks rather than capital appreciation then this concept is more appropriate for you.
Even more conserved than growth, this category will have even less risk then the previous two categories but will allow you to have some growth. Lastly, we look at capital preservation investing.If you don’t have a lot of time for the stock market to go through its cycles and you want to have some return then you need to keep your principles safe.
If your thinking of retiring in the next 5 years or so then you can use this approach which has a much lower level of risk. Choosing from these approaches can be tough for anybody so you need to be careful and fully aware of the stock market while choosing. Basic knowledge of the stock market can take you places and is quite necessary if you want to make it big here.