Stocks you hear about it on the news all the time this stock goes up, this stock goes down. So what the heck is a stock?
Wikipedia defines a stock as all the shares into which ownership is divided….. Not much help there.
So first we need to figure out what is a share is. A share is a portion of a company. When you own share of a company you own a part of the company. Back to what a stock is. A stock then is all the shares of a company. What do people mean when they own stock in a company? They really mean they own shares of a company and therefore own a part of the company.
Now the important part of all this. How do you make money off stocks? There’s 2 main ways to make money off shares of company. (Not the only way but the simplest way)
1. Sell your shares.
What this means is you buy your shares at a lower price and then you sell your shares to someone willing to buy it at a higher price. For example, you buy some shares of a company say Apple makers of iphone. Say you bought it at $300/share and the price rises to $320 (so someone is willing to buy at $320) you’ve made $20/ share profit or 6.67% profit.
2. Dividends.
What are dividends? Simple answer it’s the company returning part of the profits they’ve made that year to share holders of the company instead of say using that money to buy other things. For example, Apple makers of iPhone has a dividend of $3.08/share. Every share you own gets you $3.08 per year in divideends.
Both ways of making money off stocks are not mutually exclusive. I mean that you can do both. You can hold a stock to collect dividend then sell it off later if the share price rises.
Whats the best way to make money off the stock market? There’s many answers to that question. There’s many different strategies to using the stock market to make money. Some make less money but you don’t have to risk your money, others you can make a lot of money but you risk losing a lot of money too. You need to find the right one for yourself. If you ever need help just send me a message and we can find a strategy that works for you together.
Jacky
Jack's Investments 