I'm sure when you start learning about investments or listening in on your friends' discussion. There are few things that always pop up like stocks, bonds, dividends, and much other jargon. So today I'll be explaining in simple terms what stocks are!
What is a stock?
Stocks (also known as Shares/Equities) are how everyday people like us own a small part in some of the most successful companies in the world.
For companies, stocks are a way to raise money to fund growth, products or expansion, and other initiatives.
So how does it work?
Companies sell shares in their business to raise money. and they do this through an Initial Public Offering or IPO where they offer a part of the company to the public. (that's you)
Once a company’s stock is on the market, it can be bought and sold among investors like you and me!
Why own a stock?
To earn a return on your investment and to gain wealth. That return generally comes in two ways:
The stock’s price appreciates, which means it goes up. You can then sell the stock for a profit if you’d like.
The stock pays dividends. Not all stocks pay dividends, but many do. Dividends are payments made to shareholders out of the company’s earnings, and they’re typically paid quarterly.
In a nutshell,
-You can buy a part of a company you like through stocks
-If the company pays dividends you get to receive income from their profits too
If you'd like to start investing and want to engage a trusted advisor, book a discovery call with me so we can find out your goals and what's the most appropriate solution!
Disclaimer: All investments have their own risks, please do your due diligence before making any decisions.