Lesson 1: Why should you buy stocks?
A stock is basically a piece of a company. If X company has 100 shares in the market and you own 20 shares (stocks), you would own 20% of the company. The money that you invest works for you 24/7. If investors are optimistic about the company, they will buy more of that stock and the stock value will increase, making a profit opportunity for the stockholders.
You can profit in two ways:
1)Some companies decide to pay some of their profits to their shareholders. This is called dividends and they are paid on a regular basis (could be monthly, quarterly, or yearly).
2)The company grows and the price per stock increases. If you buy 1 company X stock today at $20 and say it grows to $22 tomorrow and you decide to sell it, you would get a $2 profit. If you had bought 3 shares and sold them later, you would get a $6 profit (since the price grew $2 per share).
One of the greatest benefits of the stock market is that your initial investment can grow way faster than if you had it in a bank account (savings account), which returns about 1% or less per year. The stock market, on historical average, returns about 10% per year.
We are currently on a very good and growing market time, it should be easy for anybody to return about 2-4% monthly.
I hope that now you have a basic idea of stocks and why you should invest. Long story short, it is going to be very important for your future, if you decide to invest today, you will be very thankful about it in a few years. If you are eager to start now, just leave a note in the comments and I will reach out to you.
Let me know what did you think about this lesson on the comments! I will keep posting lessons so stay tuned.
Have a nice day!
Great article. Do you think those new to investing will be more drawn to crpyto markets as opposed to stocks? Since the return on investment in the crypto realm seems to be significantly greater than what you can get from the stock market including penny stocks.
Thanks for your feedback! I believe new investors will definitely see cryptocurrencies more appealing because of that but of course it is way more volatile and therefore poses a higher risk. There's also the perpetual discussion about it being a bubble. It really depends on what type of investor you want to be. For high risks and opportunity of higher return or loss, penny stocks or cryptocurrencies would be great. For safe investors that are in for the longer term, the so called "blue chip" stocks (safe companies, they are secured to grow but not as fast) are the best. As my personal choice I decided to go with safe stocks for now, slow and steady. Once I get enough profit from those, I will use it in higher risk investments. Thanks for your question, I hope that answered it. Have a good day!
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