Securities and the stock market are becoming one of the most promising fields in Philippines. Knowing the knowledge as well as how to invest in stocks is essential to achieve high efficiency.
What is securities? Whether to invest in the stock market or not is a question of many investors, even those who have been in the market for a long time.
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What is securities?
Securities is a proof of the owner’s legal ownership with assets or capital of an issued company or organization. Securities can be in the form of certificates, book entries or electronic data.
Securities include stocks, bonds, fund certificates … Securities are also considered to be an abstract commodity that can be negotiated and can be replaced, representing an asset value. main.
Characteristics of the stock
- Liquidity (Liquidity): Securities are more liquid than other assets, as shown by the ability to buy and sell in the market. Different transferable securities are different. In which, the stock has the highest liquidity.
- Risk calculation: Securities are financial assets whose value is strongly influenced by risk (market risk, inflation risk, political risk …).
- Profitability: A security is a financial asset that when an investor owns, wants to receive a greater income in the future. This income is derived from dividends or an increase in the price of securities in the market.
What is the stock market?
Stock market classification: the stock market is divided into primary market and secondary market. In the primary market, this is where the shares are first issued to the public from a joint stock company, allowing the company to raise capital in the stock market. In the secondary market, this is where the stock is bought and resold after the primary issue, so no new money is generated, but just a change of stock ownership between the buyer and the seller.
Some terms to know on the stock market
|Shares||An organization’s funding is divided into equal parts.|
|Stocks||A certificate is issued to confirm ownership of shares.|
|Common shares||A type of stock that defines the right to vote on major corporate decisions and to enjoy benefits or dividends but not fixed.|
|Voting preference shares||A type of stock with a much higher value than a common stock.|
|Dividend preference shares||Is a type of stock that determines the right to be paid higher dividends than common stock.|
|Redeemable preference shares||A type of share that defines the right to be reimbursed by the issuer whenever required or under established conditions.|
|Shareholders||Are individuals / collectives that own stocks.|
|Dividends||Is the amount of profit distributed to shareholders annually from a joint stock company (including cash dividends and stock dividends).|
|Fixed dividend||The profit is distributed to shareholders regardless of the business results of the company.|
|Bonus dividends||The share of profits distributed to shareholders depends on the business results of the company.|
|Bonds||Is the type of security confirming the liability of the issuer.|
|Fund Certificates||Are securities issued by securities investment funds.|
|IPO||Initial public offering of securities.|
|Capitalization||Total value of shares of companies with listed shares.|
|Liquidity||How fast you can trade a security.|
|Trade volume||Number of securities traded during a session.|
The benefits of the stock market
Stocks and the stock market are measures of the strength of the economy. The market indicators or stock prices of companies show whether the economy is in good shape or not.
The government, thanks to the stock market, will better control the operation of the economy as well as the operation of listed companies (companies listed on the stock market will have to disclose their production and business activities. , periodic information disclosure …).
In order to mobilize long-term capital sources in addition to borrowing from banks, companies have mobilized through the form of securities issuance. This is a channel that brings abundant capital from the public to help companies develop their business.
The stock market is a potential place for investment. Investing in stocks in the market is often risky, so it is imperative that investors have a strict management, learn carefully before participating.
One of the main benefits of investing in the stock market is the opportunity to earn profits. The stock market tends to increase with the development of the economy or the growth of companies. Investing in stable, thriving companies can be profitable for investors.
In addition, investing in the stock market diversifies the amount of money investors have outside channels such as gold, real estate or savings.
Notes when investing in securities
- Before entering the stock market, the first thing to do first is to thoroughly cultivate essential knowledge such as how to read financial statements; how to analyze microeconomics, macro …
- After accumulating knowledge, it is necessary to specify the type of stock investment you are aiming for. For those who like risk can choose stocks. On the contrary, for those who are cautious, want to have a more secure income, bonds or fund certificates will be the priority type.
- Clearly define the financial capacity for the investment, allocating the portfolio to the most reasonable.
- For those who are not confident enough, they should choose a good and reputable broker.
- During the trading process, you always need to follow the trend, update the news continuously to be able to analyze the market correctly.
- Ready to cut loss when necessary to ensure capital, avoid falling into the transaction when in a panic state.
Hopefully, through our above article, you have somewhat visualized what stocks are and how the stock market works. If you want to participate in this securities industry, learn more to make profitable investment from stocks.