The definition of investing is, "To commit (money or capital) in order to gain a financial return." There are two traditional types of investments. Fixed income investments like government bonds don't give ownership rights but they do pay a fixed rate of return. Equity investing in businesses, stocks or real estate pays returns that depend on the level of success or failure of the business. People can also put their money in a bank account. The bank pays an interest rate and the money is safe and secure and grows slowly over many years. The reason people invest in the stock market is the opportunity to make significant returns in a relatively short period of time. There is also a significant risk in the stock market as there is always the chance of losing money.
The stock market changes all the time. It will either be up or down, a little or a lot. "The stock market is looked at as a thermometer of business, politics and other environmental conditions. However it is also sometimes viewed as a crystal ball because it is so important to understand what is going to happen that will affect the future stock price." It takes research to make a good decision about what stocks to buy and it is important to know what companies will have the best chance of being successful. The stock market has changed drastically in recent years due mostly to the introduction of new technology. Technology stocks are often referred to as, "the new economy". "Old Economy is a phrase used to describe the world we knew when the Dow and blue chip companies were the most important influences in the stock market. New Economy is a phrase used to describe the "dot com" world of insta ...