Disclaimer

This blog is intended for educational purposes only. None of these posts are meant to give legal or financial advice. If you need advice you should consult an appropriate professional.

Monday, August 26, 2013

buying a piece of capitalism

The world is largely capitalist.  That means the means of production are privately owned and run for profit.  So private property and profit.  Easy enough.  How does the average person get in on this?  How does the person on the street get to participate?  The easiest and possibly best way for the common man/woman to become a capitalist is to buy shares in publicly traded companies.  This is known as buying stock.  The stock market is as democratic as it's ever been.  You don't have to be rich to invest by any stretch of the imagination.  Anyone can open a brokerage account and put their money to work.  There are a few options.  You can buy shares in a mutual fund which is indirect stock ownership.  This is the way most people participate via their retirement account at work or on their own.  Another way is to open up a brokerage account and buy shares in what is called street name.  That means the shares are in the name of the broker, but they are your shares.  One more way to buy shares is directly through the company or their transfer agent.  Sometimes you can buy the first share from the company, but other times you must have a share in certificate form to get started.  That part about having the stock certificate to get started is definitely a pain.  These plans are called direct stock purchase plans for new shareholders and dividend reinvestment plans for existing shareholders with at least one share in certificate form.  I myself buy stocks through a discount broker and a mutual fund company for simplicity.  There are other ways to be a capitalist.  You could start your own business or be a real estate investor.  People have made money with entrepreneurship and real estate.  All I'm saying about those two options is they are more complicated and usually require a lot more money.  I like to stress things that anyone can do.  Are stocks risky?  Yes.  I know of no way to make money without some type of risk.  Do stocks always go up?  No no no.  If you can't tolerate the value of your investment going up and down don't buy stocks.  The stock market has never been more available to the average person.  It's a way for you to benefit from this marvelous economic system.

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