For many teenagers, learning about the stock market and how it works wasn’t something that was brought up in their early education. What most people don’t know, is that the stock market is actually one of the most important things that we use as humans.
So, what even is the stock market? This is a term that everyone has heard, but has absolutely no idea what it actually means. When people bring it up, most people think that it only has to do with billionaires and big businesses. In reality, the stock market is used in our everyday life, we just don’t realize it.
Let’s start with it word by word. The term “stock” refers to a financial instrument that represents ownership in a company or corporation. Also, the stock represents a claim on its assets and earnings. These words probably went from one ear and straight out the other. In simpler terms, stocks are basically just units of ownership in a company.
The company’s “assets” means what the company owns, and the company’s “earnings” is what the company generates in profits. The stock market is also investing in products that big companies produce.
Investing in stock is basically buying products that companies make, wait for the product to become popular, then sell the stock for more than what you originally paid for. This gives the investor a profit, and helps them make money.
A lot of questions that are most commonly asked about the stock market is why do companies allow others to make money off of their products? It is hard to wrap the mind around the idea of someone making money from something that they didn’t make. But, companies do this for a lot of reasons.
Allowing people to invest in their stock helps them research many better ways to produce and manufacture their products. Opening their products to the public helps them get better quality ideas of their product. This helps the company improve their product, and helps the investor gain more of a profit.
Investments also help hire more employees and helps modernize their buildings and other facilities. The more people they have learning about the company’s products, the more people they have to help sell the product, and make the product more popular.
Think about it like the government:. In order to gain money, the government sells bonds to help people in debt, while businesses gain money by selling stock.
Now for the interesting part:. How do you invest in stock? Well, once you buy stock from a company, you become a shareholder. This means that you now are apart of the company where you invested from. Investing in the stock market is something that is very risky. If the company that you invested in has an increase profits, that means your profits will go up as well. If the company has a decrease in profits, then your profits will also go down.
There could also be times where you could lose money as well. If you sold your stock on a day where the price falls down below the price you paid, you will lose money. In the stock market, it is common for the prices to rise and fall. This is also a very challenging thing to do because you need to time yourself well and know when the best time to sell your product is.
Investing in stock is a very tough thing to do. You have to know people very well and what they are interested in. It is up to your opinion on whether or not you think a product will sell well. Even if you are not interested in investing and the stock market, it is important to know how products help people gain money.
“What Is the Stock Market?” TheMint.org – Fun For Kids – What Is the Stock Market?, www.themint.org/kids/what-is-the-stock-market.html.