If you are thinking of putting your money to work in the stock market, but are wondering “can anyone buy stocks?” the answer is yes…and no. There are certain restrictions placed on who can buy and sell stocks, who can trade shares on a stock exchange, and who qualifies for options trading.
Purchasing stock in a company offers people an opportunity to obtain an ownership stake in a business, giving that investor the chance to profit from a well run, profitable company. Investing in a company’s stock also exposes investors to potential loss of capital if the business they invest in do poorly or go bankrupt.
In spite of these risks, purchasing the stocks of well-run corporations remains the best avenue to grow and compound wealth, as is evident by the success of super-investors Peter Lynch, and Warren Buffet. While the stock market is available to almost everyone, there are some restrictions on who can take advantage of its opportunities.
Conflict Of Interest
The stock market relies on the laws of supply and demand, the greater the demand for shares in a company the higher the price of the stock goes. Company executives, who have privileged “insider” information, could have access to information that could positively or negatively affect the price of their company’s stock, and therefore may have limitations placed on which stocks they can and can not trade.
Due to their ability to also influence stock prices, many analysts, stock reporters, and TV personalities have limits placed to how and when they can trade a stock. Many of these people have the power to move a stock in either direction, and therefore must wait a set amount of time before taking a position on stocks they may have mentioned.
These measures are to protect retail investors from “pump-and-dump” schemes, as well as to prevent corporate executives and other “insiders” for profiting from privileged information at the expense of other shareholders.
The old saying “youth is wasted on the young” is usually never truer that when it comes to investing. While it is widely known that it is better to start investing at a young age, many of today’s youth are unaware of the opportunities available to them, or are too unsure of themselves to take the first step. Even if a child or young adult is ready to invest their money, there are limitations placed on what age you can buy and sell stocks.
The state that you live in dictates the age at which you can by stocks. Most states set the age range between 18 and 21 years old. If you are the lucky parent of a minor who wishes to open a brokerage account, you can set up a custodial account in your child’s name and then transfer the account to your child when they reach the age of maturity.
Can Anyone Buy Stocks Directly On An Exchange And Who Can Utilize Options Trading?
Only a qualified stockbroker who has passed the Series 7 exam can trade directly on an exchange floor. Retail investors must purchase company stock directly from a corporation, or utilize a brokerage firm. Fortunately, investors have many choices when it comes to brokerages, as there are online and brick-and-mortar financial houses at every service level and price-point to assist investors with brokering trades.
Once you have chosen a brokerage to use to buy and sell stocks, you may be interested in options trading. Options trading offers another level of money making (and losing) opportunities, but are extremely volatile and therefore, not suitable for everyone. Investors must apply for options trading through their brokerage and be approved for options trading through the SEC.
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