I once overheard someone say, ‘I thought stocks were just the liquids you used to make soup. No wonder I’m broke!’
Jokes aside, there is quite a lot of confusion around stock market terminology.
Are you interested in knowing about stocks that make you money, not soup?
First things first, you need to understand some commonly used stock market terminology.
Let’s start with …
The meaning of ‘stocks’ and ‘shares’ has been blurred to a degree and are now often interchanged. If you mix them up, it’s not a problem as everyone will understand what you mean. However, this blog will hopefully clarify the difference:
The portfolio lists all the stocks you own (in that portfolio) and the number of shares you own in each stock.
The stocks are the companies you have invested in. In this example the stocks are ANZ and BHP. Each Stock is represented by a 3 letter code. ie. stock code ANZ = The Australia and New Zealand Banking Group Limited.
The shares show how much of the stock you own. In this example 36,000 shares are owned in the stock ANZ. When you own shares you have actually bought part of the company.
The smallest number of shares an investor can initially buy (known as a ‘minimal marketable parcel’) is approximately $500 – $600 worth of a specific stock. Once you own some shares in a stock, you can buy smaller parcels of shares to add to your shareholding.
Every time you buy and sell shares you are charged a fee called brokerage. To prevent brokerage eating up your profits, be wise: save up and buy bigger parcels.
Once the jargon is broken down into bite size pieces, learning about shares is not hard. Understanding stock market terminology will open up a new and exciting world.
Finally, take a look at how to stand out from the average investor.