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

Hey,

Welcome! My name is Jack, I’ve been investing for the last 12 years. I decided to start this blog because I realized a lot of my friends didn’t know how to invest or where to start investing. So I’m going to explain some key concepts I’ve used over the years to help everyone get comfortable with investing in their money and their future.

So a little about me, I am a published scientist with 2 papers in Remote sensing (Satellite Imagery). I’m a licensed Real estate agent in Ontario and I’ve been investing in stocks for the last 12 years. I believe that investing is for everyone and if you don’t invest in something you’ll be losing out in the long term.

There’s a popular myth that buying stocks is risky or you need a lot of expertise and money to buy stocks. I don’t know how that myth started but it’s definitely not true. Stocks and investments does come with risks but so does putting money under your mattress or putting it in a bank.

Huh? How is putting money underneath your mattress or in a bank risky?

Well, if you keep your money in a bank or store it underneath your mattress, there is a small chance the money get robbed, or worse – inflation might devalue your money.

What’s inflation?

Inflation is how much you can buy with your money. The price of things rise and fall. Gas, Bread, Rent, that latte you get at Starbucks. Inflation is calculated based on a group of items that most people use, and if there’s an increase in price it’s called inflation while a decrease in price is called deflation.

Okay why does that matter to me?

Well, if the price of things rise, your money is now worth a little less. Haven’t you heard your parents tell you that a Coke used to cost a quarter or that everything is getting more expensive? That’s because it is and your money now is worth a little less. So by not investing your money, you are actually losing money because everything else is becoming more expensive.

For example…

In Canada (Where I live), the inflation in 2019 was 2.1%. So if you had a loonie($1) in December 2018, by the end of 2019 that same loonie is now only worth 97.9 cents because the average price of things rose 2.1%. Why should I care about losing 2.1 cents? That’s ridiculous! Okay, let say it was December 2009 and you had $1,000 in a no-interest chequing account at the bank. Inflation was 1.7% since December 2009. That means that the $1,000 in December 2009 would be worth $816.60 by the end of 2019! You lost a $183 by doing nothing!

Now an inflation of 2.1% doesn’t mean that everything went up 2.1% There is some variation due to differences in where you live and some things get more expensive while others get cheaper. However, on average it’s a good benchmark for how much your money is worth.

But Jack…I still see a $1,000 in my chequing account?

Yes – but can it buy you the same things? A basket of goods (milk, eggs, bread, car, rent) worth a $1000 in 2009 would cost you $1180 now in 2019. For a more popular example, the average 2009 rent price for a bachelor apartment in downtown Toronto was $1,250. The average rent price now is $1,900. Your money’s buying power can decrease if you do nothing!

Oh no! What do I do?

Don’t panic.
Take a deep breath. And remember that you are in control.
By reading my blog, you will understand why I follow these investing principles:

– Understand what you are investing in
– Understand your risk tolerance
– Understand potential of your investments

My goal is help you learn to value and trust your financial knowledge, so you can gain control of your money and your future.

Well I hope you enjoyed this as much as I have if you have any question please send me a message. I enjoy hearing from people.

Thanks for reading!

Jack