When you buy a share of stock, where does the money you pay for your share go?

Answer 1

It depends on who you bought it from. If you use a broker, some of the money paid would go to the broker, the rest would go to whoever owned the stock before you. Also, money may be paid to the company, but only when you're buying newly issued stock from that company. For example, if Company X has 100 shares of stock on the market (already issued) and Bob decides to sell his stock to Mary, the money goes to Bob, not to the company. However, if Company X decides to issues 20 additional shares of stock and Mary decides to buy some of those shares, that money would go to the company.

Answer 2

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Answer 3

If you earn $20000 or more you can invest $300 each quarter. Buy but do not sell. This makes you an investor and not a speculator. Pick stocks paying a good dividend, well covered by earnings, and with a history of being increased. Reinvest the dividends and add more. Hope that the stock price goes DOWN so that your purchases will produce more shares and thus greater future dividends. There are brokerages dealing in U.S. stocks and ADRs that charge little in commissions. One coming to mind is Scottrade. What is important is that investing makes one well to do. Speculating loses about as much as it wins,minus trade costs. This is what I did after a moderately successful speculating period. Believe me, it worked.

Answer 4

There are two markets for public stock -- the Primary market and the Secondary Market.

In the Primary Market, the company creates new shares and sells them to the public. This is usually done through an IPO (Initial Public Offering) or through an SEO (Seasoned Equity Offering). The IPO is when the company first goes public. The SEO is when a company that is already public issues new stock. Investment banks take a fee of about 7% for their work in bringing companies public

Most shares are bought and sold through the secondary market, In that market, people who own stock sell it to people who want it. In the secondary market, brokers match up buyers with sellers. The money goes to the seller. The company does not get a cent.

As an analogy, you can think about the market for buying cars. If you buy a new car from a dealer, that is the primary market. If you buy a used car from someone else, that is the secondary market. The money goes to the guy you bought the car from -- and the car manufacturer doesn't get anything.

Answer 5

When To Buy A Share

Answer 6

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Answer 7

Your payment will go to the seller of the share of stock. When it's your turn to sell, the payment will go to you. Of course, if you hire a stockbroker to sell your share for you, the stockbroker will deduct his commission from the sale price.

Answer 8

To the person that sold you the stock. If you bought the stock from the company that issued it, it shows up on their balance sheet.

Answer 9

Companies go public (sell shares) in order to raise capital. They promise the investors that they will take that money, go out and earn more with it, and give some of the profits back to the investor. So when you buy shares, you are giving that company money in exchange for a piece of its future profits.

Answer 10

Ultimately, it will go to the company whose share of stock you purchased. The company will use it as equity and fund future investments, projects, or acquisitions. Essentially, they are "borrowing" money from you to help fund their business.