Margaret Mugo

Stock Investing: 3 Ways to Manage Your Investment Account Stocks are financial instruments that provide stockholders with a stake in the issuing company. A unit of stock or share gives the owner the right to own a particular percentage of the corporation's profits and assets. The primary purpose of stock issuance is to raise capital for companies or expand their business.   Stock exchanges are the most common places to buy and sell stocks. The government regulates this trade to protect investors from fraud. Initial public offerings or IPOs allow companies to go public and trade their stock on exchanges. To buy the available equities, you need a brokerage account that lists the offer, i.e., how much the stock is going for. Typically, the price depends on the prevailing market conditions- supply and demand- and other factors.    Managing Your Stock Investment Account: Where to Begin There are three ways to do it: do-it-yourself (self-management), through a Robo-advisor, and hiring a financial advisor.     1. Self-Directed Brokerage Account  If you are confident in making proper investment decisions, you can open a self-managed brokerage account and exercise full control of your money. That way, you can decide how much to invest in stocks, exchange-traded funds, mutual funds, etc. All of this can be done online at your convenience.   2. Rob-Advisor Account This is an automated system for managing stocks. Decisions are made similarly to human advisors but at a lower cost. All you have to do is deposit cash, and the Robo-advisor will design an investment plan tailored to your needs. You can start investing within minutes of opening your account.    In designing your stock portfolio, the Robo-advisor considers your risk tolerance and time horizon. The strategy utilizes exchange-traded funds (ETFs) with certain features like volatility levels.    If your financial goals are long-term, say retirement, stock funds may be the best choice for aggressive solutions as they have a proven track record of high ROI. The robot would likely choose a more conservative portfolio for short-term financial goals, including bond funds and cash.   3. Human Professional (Financial Advisor)  This is another viable option if you don’t want to worry about stocks constantly. Before hiring an honest financial advisor, do your due diligence to see who can keep track of your goals. You need a professional who can create a portfolio that aligns with other financial goals like saving for education. That way, you won’t stray from your budget.   So, after investing, how will you be earning from stocks? One way is through capital appreciation, whereby the value of a share increases when its price rises. The second way is through dividends- company profits are distributed to shareholders as dividends.