At some point in your life you are going to have to invest in your financial future. One way in which you can invest your money is through buying stocks. Whenever you turn on the T.V. you hear discussions all the time about the price of “so & so” stock is down or the price of “this and that” stock is up. Lets answer some of the main questions that surround the mysterious world of stocks.
What is a stock really?
Whenever you buy a stock it signifies that you own a part of the company whose stock you bought. This ownership give you claim to everything that the company owns. This means that you have a claim, although a small claim, to every thing the company owns from the office coffee pot to the company’s private jets. Stock ownership also gives you a claim to the company’s earnings and voting rights in the company.
Why would you want to own a stock anyways?
I will go ahead and state the obvious, to make money. Owning stocks opens up a additional revenue streams that will built wealth. One way that a stock will build wealth for you is through what is called dividends. A dividend is portion of the company’s earning that are paid to the shareholders on a regular basis. This payment can be used to buy more stocks or used as a income source. Another reason that you would want to own a stock is for the price appreciation of the stock. What ever the difference between the purchase price of your stock and the current market price of the stock is your gain in value. If you were to sell that stock you would receive a profit off of your original investment.
Risk of stock ownership
If it was as simple as put your money in and reap the rewards of stock ownership everyone would have there money in stocks. However stock do pose a risk of losing whatever you put in as your original investment. You should always research a company before purchasing stock in a company. Proper research and guidance from investing professionals will greatly increase the odds of rewards from stock ownership.