facebookHi I know this is a really basic question, but I’m just starting out and want to learn about investments. So, what exactly are stocks and how do people make money by trading on the stock market? TIA.? - Seedly

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Anonymous

11 Feb 2021

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Hi I know this is a really basic question, but I’m just starting out and want to learn about investments. So, what exactly are stocks and how do people make money by trading on the stock market? TIA.?

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Just attend a basics of investing webinar online (there are many resources online) and you can start from scratch :) https://www.sgxacademy.com/retail-investors/?do...

Hey there anon!

I am also a budding investor so I totally get where you're coming from but no question is too basic. Let's learn together!

To answer your first question, if you own a company's stock, it essentially means you own a part of the company. Thus, when looking out for stocks to buy, we must not only look at the financials but also the core business model of the company and also the type of company it is i.e. what kind of business are you buying - tech (Google, Apple, Microsoft), commodities (palm oil), retail (shopping malls).

To answer your second question, I must disclaim (again) that I have also only recently started on my investing journey so my explanation may not be the best. I think when I look at stocks, I see 2 types - growth stocks and dividend stocks.

1. Growth Stocks

Growth stocks is for trading so it's the one where you hear phrases like "buy low, sell high" and the turnover of the stocks can be in matter of days. It is also usually short-term. People make money by making profit out of the selling their stocks above the price that they paid for. It is generally viewed as a riskier option than dividend stocks.

2. Dividend Stocks

Dividend stocks, on the other hand, is to hold for long term and as the name suggests, pays you dividends. Dividends can simply be viewed as a form of 'reward' for putting your faith, money and time (since you will be holding 10 - 20 years or forever) in the company. People make money by earning the dividends, then reinvesting back to take advantage of this magical thing called the compound interest!​​​

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Rachelle Lye

Rachelle Lye

07 Sep 2020

Digital Marketing at Fintech

Hey Anon!

I just wanna say that I think it’s really brave and laudable that you’re taking the firs...

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