What are Investments?
Investing is the act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit. What this means is you are basically putting some of your money in, and hopefully getting more money out of it. Take this for an example. You are starting a small business that homemade fidget cubes. You create them for a total price of around three dollars, and you sell them for seven. This is making you a two dollar profit, and overtime, the money starts to stack up. You continue selling these cubes until your business becomes bigger, and you create a website to get yourself noticed, and you recruit workers that will help you out with the manufacturing and financial part of your business. You move on to become a big company, and you become open to the public. You decide to sell shares in your company, and end up with millions after just a few years after your business hits the stock market. All of this started from an idea that you got in your bedroom one night, and you decided to commit and roll with it.
^Watch this video for more information as well^
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Diversification
Diversification is the process of a company enlarging or varying its range of products or field of operation. This means that companies will add things like new products, services, and etc., to make their companies bigger and more diverse, hence the name.
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Stocks. What are They?
a stock is a share of a company held by an individual or group. Corporations raise capital by issuing stocks and entitle the stock owners (shareholders) to partial ownership of the corporation. Stocks are bought and sold on what is called an exchange. There are several types of stocks and the two most typical forms are preferred stock and common stock. Stock prices vary based on quality and popularity of companies. For example, stock prices at Microsoft would be way higher than a random company that makes horrible T-Shirts.
Example of a Companies (Nike) Stock Data Overtime:
Stock Data Information | |
File Size: | 43 kb |
File Type: | xlsx |
Above, you can find a file that tells you about how five stocks have done in the past, and why they are going in the direction they are currently going.
The Stock Market
The stock market is the market in which shares of publicly held companies are issued and traded either through exchanges or over-the-counter markets. Also known as the equity market, the stock market is one of the most vital components of a free-market economy, as it provides companies with access to capital in exchange for giving investors a slice of ownership in the company. The stock market makes it possible to grow small initial sums of money into large ones, and to become wealthy without taking the risk of starting a business or making the sacrifices that often accompany a high-paying career. Remember, BUY LOW, SELL HIGH!
Read more: Stock Market Definition | Investopedia http://www.investopedia.com/terms/s/stockmarket.asp#ixzz4aZXk9QIp
Read more: Stock Market Definition | Investopedia http://www.investopedia.com/terms/s/stockmarket.asp#ixzz4aZXk9QIp
Risks and Reward
Sadly, retail investors might ends up losing a lot of money when they try to invest their own money. There are many reasons for this, but one of those comes from the inability of individual investors to manage risk. Risk/Reward is a common term in financial vernacular, but what does it mean? Simply put, investing money into the investment markets has a high degree of risk, and if you're going to take the risk, the amount of money you stand to gain needs to be big. If somebody you marginally trust asks for a $50 loan and offers to pay you $60 in two weeks, it might not be worth the risk, but what if they offered to pay you $100? The risk of losing $50 for the chance to make $100 might be appealing.
Read more: Calculating Risk and Reward | Investopedia http://www.investopedia.com/articles/stocks/11/calculating-risk-reward.asp#ixzz4afNiQ2EG |
(Press the picture to visit the site I got it from)
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