Investing Basics 101
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Getting ready to start investing can seem intimidating, especially if you're a first-time investor. You may feel that there are endless topics to learn about and many tactics to study.
While we do encourage you to learn about a variety of investing topics, there's nothing like trying it out for yourself. In the meantime, we have put together a 101 crash course about the topics you'll most likely come across as a beginner investor.
Investing 101: Stocks
Stocks are securities that trade on financial markets. A stock represents ownership of a company. Your ownership of a company is dependent on how much stock you own and how much stock the company has authorized for trading. You may hear the words stocks and shares used interchangeably since a share is essentially a unit of stock. Easy enough, right?
Public companies sell their shares after they go public through an initial public offering (IPO) to raise cash to fund their operations and growth. Ownership of a company's stock gives you voting rights at shareholder meetings and may give you the right to receive dividends, depending on the company and type of stock you own.
PRO TIP: Once you have registered for Raseed and are ready to get started, you can search through thousands of stocks and pick your favorites through our watchlist or through our search screen.
The stock market is essentially where buyers and sellers meet to trade. The stock market is the market that stocks trade on. Investors also have the option to trade other types of securities on stock markets, including types of index funds like exchange-traded funds (ETFs).
There are various stock markets available all over the world. For example, the New York Stock Exchange (NYSE) and Nasdaq Exchange are the two main exchanges in the US. Internationally, there's also the London Stock Exchange, Shanghai Stock Exchange, and Dubai Financial Markets, just to name a few.
Raseed gives users access to the US Stock Markets including the NYSE and Nasdaq. In total, there are 7,000+ publicly-traded companies on these stock markets alone.
Investing 101: IPOs
Initial public offering (IPO) day may look glamorous, with the bell ringing on the NYSE trading floor. But in reality, getting to this point takes months of preparation for companies.
In order for a company to begin trading its stock on the stock market, it needs to go public. "Going public" through an IPO refers to the transition of a company from being a private company to a public company. A company typically IPOs to raise additional cash to fund various projects. There are other reasons a company might IPO as well, including to improve brand awareness (think companies in the consumer space like Nike, Tesla, and Apple).
The IPO process is a great way for retail investors to invest in a young, growing company. In 2020, a booming time for IPOs, 407 companies went public in the US.
Exchange-traded funds (ETFs) are a type of fund traded on a stock market just like regular stocks. ETFs allow users to buy a basket of stocks in one instrument. This helps reduce transaction fees and makes it easy for investors to diversify their portfolios. ETFs offer diversification with only one investment with a combination of securities.
ETFs cover a wide range of topics, indexes, regions and more. For example, the SPDR S&P 500 ETF (SPY) is an ETF that tracks the performance of the S&P 500. An industry-specific ETF is the Biotech ETF (BBH) which includes a combination of biotech stocks.
Investing 101: Fractional shares
Raseed loves fractional shares. It's what we specialize in.
Fractional shares are new investment instruments that allow you to start investing in the stocks you love even if you don't want to pay for the full price of a stock (for whatever reason). Fractional shares also allow for more diversification with lower buy-ins.
At Raseed, buying and selling through fractional shares is no different than buying full-shares. It's instant and cost-effective. Plus, it even allows investors to receive dividends on dividend-paying fractional shares.
Fractional shares allow investors to also use dollar-based investing. This means you don't need to pull out your calculator to find out how many shares you can afford to buy. Simply buy and sell using dollar amounts like you would with consumer products.
This is just the beginning for newbie investors. There's a wealth of knowledge in the investing world. The more you know, the better you'll be able to make educated decisions about your assets.
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