Expert: Paul Henneman - 1/5/2009

Question
Hello,

I have currently start a busiess with out investing even a piny in it. i'll tell how.

I am from afghanistan.
I said to my friend that i have some one who sells Cement, if we start it what will be your opinion about it. he said this is wonderful, so i talk to the seller and we agreed at a fix price agreed by both of the parties.

I said to me friend that i am not going to invest in it but if we deal this i will have 40% of the profit when we sell it in Afghanistan so he agreed and i also have my commission from the seller side.

Now i have got $500 from the profit and $112 from the seller side with the total of $612 with our even investing a Cent.

i will run this busiess in partnership with my friend for as long as possible but next time i am going to invest in it.
we will make a joint partnership Company.

Now i also like to start investment in stocks and mutul funds.
for example i will but 10 share of BRK.B at $3343/share which will make a total of $33430.
how will i get my profit and in how long.
if the Company from which i have bought shares make profit and if the Company makes loses then what will happen, for example a week after the price of each share drops to 3043/share what will happen if i keep the share and wait in hope that prices will rise,
If the price is rised to 3540 per share how will be paid.

I hope you would have understood my question.

Regards
Mansoor

Answer
Mansoor,
   Thank you for your question. To purchase a stock, you would need to open a trading account, deposit money into it, and then use those funds to purchase the stock. If the stock prices goes up, you can at any time sell the stock, it is converted back into money at the current stock price, and you can then withdraw the larger amount of money from the trading account. Or you can use the extra money to buy more stock.
   The opposite happens if the stock loses money. If the stock drops in value, and you sell the stock, you will end up with less money than when you started. You can decide to not sell the stock and hope that it increases in value in the future. If you do this, it is possible that the loss in value is overcome but the stock price rising again in the future. However, it is also possible for a small loss to get much larger if you decide to hold on to a stock that has a declining stock price.
   Investing is very difficult, and it is easy to lose money if you are not careful. I strongly recommend that you read and learn more before you invest. A good book to start with is "Investing for Dummies". This book can be ordered online at www.Amazon.com, and will teach you most of the basic types of investing. It will give you enough information to decide what interests you the most, then you can do more detailed research into that topic.
   I hope that this helps gets you started. I wish you the best and hope that you are successful in your finances.

Sincerely,
Paul Henneman
President
ValuEngine Inc
www.ValuEngine.com