What is an investment?
An investment is the action or process of investing money for profit or material result. People normally invest in company's stocks.
What is a stock and what is it used for?
A stock is the capital raised by a business or corporation through the issue and subscription of shares. Companies sell shares of stock to raise money.Stock prices can go up and down, and if a company is large enough it gives dividends, or small amounts of money. How many shares of stock you own is how many times you receive the dividend. One example is if a company pays $0.50 in dividends and you have 4 shares of stock, then you'll earn $2.00. Companies pay dividends either 2 or 4 times a year.
Why even bother to buy stocks?
If you own a share of stock then you own a part of the company. Owning part of the company means that you can vote on the Board of Directors, the people who make the decisions of the company. People also buy stocks when they think a company will do well and that they can earn a profit from it.
How do people ear profit from stocks?
There are 2 ways people earn money from owning stocks. The first is by receiving dividends, which I explained earlier. The second way is by buying and selling shares. Buying and selling shares is the main way people earn money when investing.
Always remember, buy low and sell high.
Diversification
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