There’s been a lot of talk lately about buying stocks, trading stocks, investing in stocks, stock market etcetera. So you can’t be blamed if you are currently wondering, what even are stocks? Well, let us help you answer.
Stocks are small units of ownership in a business that you or anyone can purchase. When you purchase one of these units or stocks, you become a shareholder in the business, meaning you own a small piece of the company whose shares you’ve purchased. Another name for stocks, then, is shares.
The primary reason people choose to buy stocks or shares in any business is so that they can earn a return on their investment into a company. There are two ways you can earn returns from stocks:
- Dividends. These are payments made to shareholders out of the company’s profits. They’re typically paid four times a year. However, some organizations may pay dividends twice a year or once a year. They can be paid to you in cash, or you can reinvest them to buy more shares in the company.
- Capital gains. Stock prices appreciate if the market values the business higher, and falls if the market values the business lower. Like any other commodity of value, stocks can be bought and sold privately or on stock exchanges. Hence, if the price of your shares in the business becomes higher than what you bought them for, you can then sell the stock for a profit if you’d like. The profit you make from the difference is known as capital gains.
Despite the economic ups and downs, the stock market has consistently proven to be a good place to invest and save for your future. When you invest in stocks, you’re putting it into a business which, if it is a good one, should grow in value and give you a lot more than you invested in the long run.
Rise exists to provide seamless access to global, dollar denominated investments — in this case, stocks in high quality companies trading on the US stock exchanges. Our platform is designed to help you invest steady amounts every month while your funds are invested and managed by our experts, so you can focus on living your life.
To get started, visit www.rise.capital, join the waitlist and get early access to the mobile app.
Come back next week and we’ll talk more about how stocks work and how you can better invest in them!