Stocks
Fundamentally, stock market is an avenue for business people to meet shareholders. Other than bank loans, they now have another option to finance their businesses. They did it by offering their company’s equities in exchange of shareholders cash. The company is never required to repay the capital, but the new shareholders have a right to future profits distributed by the company. For shareholders, they have alternatives to where they should put their money into. In the same time, they get the opportunity to participate in capital intensive businesses at an affordable price. However, unless you are the major shareholder, you don’t have enough power in deciding company’s directions.
Forex
The foreign exchange market, or forex, has notoriously been the domain of government central banks and commercial and investment banks. But now more than ever individuals are tackling the forex market as it offers trading 24-hours a day, five days a week, and the daily dollar volume of currencies traded in the currency market exceeds $1.9 trillion daily, making it the largest and most liquid market in the world. In this area we focuses on everything to do with forex, from beginner to some of the most advanced strategies out there.
Mutual Funds
A mutual fund lets you invest in a group of stocks or other investments picked by a professional investor. A fund often offers a broader range of investments than you could buy on your own. When you put your money in a mutual fund along with many other people, it creates a large pool of money that can be invested. The company that runs the mutual fund puts a professional in charge of investing the money. This person is the fund manager. The fund manager decides where to invest the money and manages it for all of the investors, so you don’t have to decide what to do. The manager also decides when to buy and sell investments for the mutual fund.
You put money into a mutual fund by buying units of the fund. You can choose a fund that buys the kinds of investments that you’re comfortable with, and that will help you meet your goals. Is the most important thing to keep your money safe? Get regular income? Grow your money? The fund you choose must be right for you. The price of your units will go up if the investments in the fund do well, and you will make money if you sell. If they are not doing well, the unit price falls. You will lose money if you decide to sell your units when the price has dropped. In some cases, the money the fund makes will be distributed to its investors in the from of cash or additional units. You are putting your money in the hands of a professional. You do this hoping that you will make more money than you could on your own. For some investors, this is not the best choice. It depends on what kind of investor you are.
Options
An Option is a contract giving the investor the right to buy or sell some instrument at a given price on or before a stated date. Options contracts are written on all sorts of underlying assets: real property, stocks, bonds, even movie screenplays. The basic idea is simple. Invest a (relatively) small sum today, to control something worth a larger amount today. Bet that the price will move in a given direction before a certain date, then sell and pocket the difference.
For example, suppose Google shares are selling at $400 per share. But buying 1,000 shares of GOOG (the symbol for Google stock) at $400 each would cost $400,000. That's a substantial investment of cash, one beyond the means of the average investor. Every option has an expiration date - the date by which the investor must 'exercise his option', i.e. execute a decision to buy/sell the instrument or lose his invested money. Depending on the underlying asset, and other factors, the date can be anywhere from a day to several months hence.
Options also have a strike price - the price at which the underlying instrument has to be bought or sold when exercising the option. Options aren't for everyone. They're more complicated (though not too much), riskier, and generally involve shorter term trades and the requirement to watch the market more closely. If the price goes in the predicted direction before expiration, you make money. Otherwise, you lose (some or all of) your investment. As with any investment, do your homework. Make sure you understand how options work and what the relative risks are. In particular, study the market for that type of underlying instrument.
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