Ascertaining The Real Value Of The Stock Market Investment

The most common question that comes from the group of new investors in the stock market is how much it exactly costs to invest in the stock market. Answering this question might not be easy even for the experts since there’s not just one single factor that rules it. There are multiple factors that have its own influence, irrespective of the kind of investor you are, the type of stock you buy and the company that you choose to invest upon. As easy it is to earn some money, easier it is to lose in it as well. And this is the particular reason why the experts believe that everyone should know in minute details about the market before putting in their first steps.

According to Ram V Chary when it actually comes down to calculating how much does it actually cost to invest in the stock market, one must be aware of the various types of stocks that exist in the market. There are different types of stocks that one might choose to buy, and the value of each of them does vary.

• • First comes the common stock. These are rather securities that represent the ownership of various companies. Once these stocks are being bought, the owner earns the right to show his opinion and vote in any of the shareholder’s meeting that is being held. Generally on the priority model, the common stock holders come at last- and this means, if the company ever ends up in being broken up, and then these common stock holders will get the value of their stocks only after the creditors and the preferred share holders. So it can be very easily ascertained, that the value of these stocks are the least and the returns expected from it are too meager.

• • Then in the list comes the preferred stocks. These stocks somewhat brings in a little ownership of the company, but takes away the power of voting rights. These preferred stock holders, unlike the commoners receive the dividends, which are being calculated on a fixed rate. As a result of it, the value of these preferred stocks has got a higher yield per capita when compared to the common stocks.

• And lastly comes the Penny stocks, which are simply referred to as the common stocks of the small public companies. These stocks are generally priced below $5.

The biggest of all factors that rule the value of these stocks is the inflation and deflation in the economic world. When inflation curbs in the cost of manufacturing and transporting the goods also rise, this leads to the drop in the revenue that is being earned. Hence during such situations, the value of the stocks falls. On the contrary, deflation is when the value of the goods in the market drops down. Considering the logical factors, this must be a relief for the investors, but generally the investors do not show any interest in investing during such condition. Ram V Chary remarks that the investors believe that there’s deflation in the market is the result of a weak economy. As a result of it, the stock market again seems to drop.

Hence, it can be readily ascertained that the stock market is something that will keep surprising everyone, and all sorts of speculations fail here. So it’s better to take some expert comments before investing the hard earned money in this particular sector.