Stock Market

Factual Questions
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  1. The value of stocks WILL go up/down if someone farts in China. In other words, the value of your stock will have NOTHING to do with how the company is actually doing. Rather how other people manipulate the entire stock market.

  2. The people who run the company, the stock is for, may or MAY NOT pay any dividends. There is no guarantee you will be paid any dividends, even if the company is making record profits. They can simply decide to not pay the stockholders anything and give themselves big pay raises.

  3. Bonds* will stipulate that the borrower MUST pay you a certain amount. A bond holder can declare bankruptcy and not pay a cent. So be careful to choose a government or business in good financial shape. Be sure the bond (loan) is secured and for something necessary like a city water system, sewer system, road, etc. If they defaulted, you would own the water, sewer, or street! (Unlikely to happen.)

  • A bond is when you loan money to a corporation or government.
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I agree with those who are warning against individual stocks. Most companies go bankrupt eventually and equity investors lose all their money. There are a minority of companies that do extremely well, and investors in those companies get outsize returns. But trying for the latter is pure gambling. What you want is a diversified portfolio, where the relatively few winners outweigh the majority of losers.

In addition, you need to consider brokerage fees for buying and selling. These are generally $7-$10 per transaction. If you are buying blocks of stocks worth $10K or the like, this is not a big consideration. But if you’re somewhere around the poverty line, as indicated in the OP, then the amount you’re investing is going to be small enough that per-transaction fees at this level will kill you.

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Reported.