Hello Donavan. Short answer is no, you cannot go into debt by purchasing stock; the most you can lose is your original investment.
Now to clarify, the previous statement only applies to purchasing stock (the primary type of market transaction). There are other "strategies" out there where it is possible to lose more than your original investment. The two main types are 'shorting' stock and selling naked call options.
Shorting stock means you are selling stock without buying it first. If it goes down to $0, you profit 100%. However stock can theoretically increase to infinity, therefore your risk is theoretically infinity.
A similar concept applies to selling options. You may sell the option for someone to buy stock (that you don't currently own) from you at a specific price. Since stock prices can theoretically rise to infinity, if you guarantee a specific price and the stock does rise to infinity, you must purchase it for infinity and sell at your guaranteed price.
It's really wise to stick with traditional buying and selling stock, at least until you get comfortable with what you're doing in the marketplace.
Here is a quick overview of how stocks work:
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Whoever owns the shares of stock are the owners of the public company, no one else. When you buy a share of stock, you are then one of the owners of that company. It could be any of over 13,000 companies that are traded with stock on the open market such as McDonald’s, Coca-Cola, Amazon.com, Ford, Krogers, your local bakery or electric company.
As a company earns money, it becomes more valuable and this value is reflected in the price of its shares on the open market. You can collect this increase in value when you sell your shares for more than you paid for them.
The company’s board of directors makes the major company decisions and decides what to do with its net earnings.
?Some or all of the earnings may be re-invested in the company so it can grow, open new stores or make repairs. When this is done, the earnings money is used up but the company is more valuable by that same amount.
The per share price, having increased because of the earnings, retain that increase when the earnings are re-invested in the company.
?Some or all of the earnings may be given directly to the shareholders and this is called a dividend. They just mail you a check or send the money to your brokerage account. This makes the price of the stock decrease by the same amount as the dividend, so you have the same value in the total of stock and dividends.
Since you are an owner of the company, the members of the board of directors work for you. You can inform the board of your ideas, concerns or recommendations and these carry the weight of your shares.
Each year there is an election and you can vote for the board positions and some special rulings, one vote for each share that you own. If you own at least 51% of the shares then your vote always wins in the election.
You are also protected when you own stock. For instance, if your company gets sued and loses more than it can pay, the law cannot come to you, one of the owners, and confiscate your house or other property. The shares may become worthless, but that is all you can lose.
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If you buy stock hoping that you can sell it for a quick profit because of the daily or monthly swings in price, then you are gambling rather than investing. You are trying to guess better than the public, including professionals, how the price will change.
To truly invest, choose a company that has steady earnings each year instead of losses. If your company has very little long term debt, it will likely not get into financial trouble.
If you buy these quality stocks and hold on to them for a period of time, the share prices will go up for a real reason - the companies are earning money every year and becoming more valuable. This is not gambling; you are owner of a money making business.
If you save a portion of your income each payday and as it accumulates invest in stocks, over the course of several years you can grow very wealthy indeed. It is like hiring someone to get a job and earn money for you, and then using that money to hire more workers. Your money grows exponentially.
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Go to this site:
http://www.investopedia.com/university/b...
It will explain how the process works.
cannot believe this question
I want to invest but idk how it works completely wen you lose money can you go into debt and when you get money how does it work
