Stock Investing at Lower Risk: A Guide for Beginners

Here’s a simple breakdown of key points for investing in stocks

For the beginner, stock investing can seem like an uncharted mine field because of terms, regulations, and fear. This article provides five important pieces of information that can help students understand stocks and become better investors. Here goes:

1. Owning stock is owning a company. As an owner, you have rights and responsibilities.
2. Stocks grow two ways because they can increase in value and they pay dividends.
3. Stocks rise and fall in value. Keep in mind what goes up can come down.
4. You will pay taxes unless your stocks are held inside some type of tax deferred retirement account.
5. Stocks can be volatile. Volatility is different than the typical rise and fall in price described above because volatility occurs when an investment has major price swings in a short period of time.

For more information go to

http://www.forbes.com/sites/mitchelltuchman/2013/08/09/stock-investing-at-lower-risk-a-guide-for-beginners/

Teaching Suggestions

You may want to use the information in this blog post and the original article to

• Provide basic information to students who are studying stock for the first time.
• Help students understand the process of stock investing.
• Compare stocks with savings accounts, certificates of deposit, bonds, mutual funds, and other investment alternatives.

Discussion Questions

1. How can you profit from a stock investment?
2. What are the risks associated with stock investments?
3. How can you avoid paying taxes on stock and other investment alternatives?