My Little Knowledge On Stock Investment

Once a business is listed in a stock market, its total worth is converted to shares. Let say company A worth $1 million now and it get listed for 1 million shares, so each share is $1 each.

Stock Investment

If you have 1 share means that you own 1 out of 1 million of Company A. When you own 51% of the shares, you officially own Company A. Haha… If the business does well next year says its worth becomes $2 million then each share is worth $2 now. Thus you have gained 100% profit from $1 to $2.

Stock Vs Mutual Fund

I heard that many people do not like to buy mutual fund because its 5.5%(common rate) is too high if compared to stock investment where each transaction is charged at 0.42%(common rate). Do you know why? The reason is when you buying stock, there is only one broker earns your commission while there is a huge team working with your fund.

Some people recommend buying mutual fund than stock when you have 7 stocks since the total charges (buy & sell) you need to pay is 5.88%; which is equivalent to the charges that we paid to mutual fund. So if I can find one mutual fund that already invest into 7 or more stocks that you are interested in, then its worth for you to buy that mutual fund and leave it for the fund manager to handle it.

In order to really enjoy the low fee, you need to have a larger capital. For instance, if the minimum fee is $50 and the normal charge rate is 0.42%, and then each of your buy sell transaction should be more than $12,000 else you need to pay more than 0.42% charges if not mistaken.

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