Buying Stocks

We're here to talk about Buying Stocks, why do it and how to do it? Well over the longer term in the standard of pores 500 which is a list of the top 500 companies here in the United States the growth in the rate of corporate profits of those businesses has been about 8% a year. Now you might say "Wooow 8% is all a lot compared to Google which goes up 50% a year or other companies which goes up 40% a year but there are many companies which do it consistently and if you going to do it consistently you probably do it a lesser rate than the big time rates that you it some of the software or hardware companies. Anyway why buy stocks? well today treasury bills pays zero percent, long term treasury bonds pay 2, you make about 1 percent in your money market, you probably loosing money in real estate, you probably loosing money in commodities and that leaves stocks.

Now today if you buy anything, if you buy a public company and their earnings do good 8% a year, money compounds pretty quickly, your money will double, the value of the cash flow in the other line business if it grows an 8% a year will double every 9 years. It doesn't mean that the price of the stocks will double, it may not but the intersect value of that business well and ultimately the stock market will value that company. So why buy stocks? Because 8% a year is one of the highest rates of return you can get in any investment across any category. Now how to buy it? Well you can go to your local stock broker which would be a wonderful thing because you can solicit research and advices to what is practical for you to buy and reasonable for what you, for you to buy or you go to a discount broker if you think you know what you're doing the differences is what you going to pay in commission.

In today’s world they're may not be a lot difference, in at the full service broke you get research which really matters. There's a 3rd way, if you decide you really like the business and want to make a long term commitment to that business you can actually buy stocks directly from them, you can buy stocks from most of the major US companies that exist. Now why do that? Well you can transfer your stocks that you purchased to some else for free in most cases and a lot of the time the total cost to buying that stocks is cheaper if you go direct to that company, so that's a little bit about why buy stocks? Because of the highest rates of return and then last but the list you had to buy it