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Are Stocks Right for You?

The stock market is easily accessible, but be careful and seek experienced advice.

It has become much easier to invest in the stock market in the past few years. App-based trading has opened the doors to anyone who has a phone, a few bucks, and a willingness to take the risk. When you buy stocks, you’re investing in ownership of a company. It might not seem like much—one share out of hundreds of millions doesn’t give you a lot of say, but keep reading to find out what you can do with stocks to make them work for you!

You’re an ownerhigh schoolers

Buying and selling stocks is buying and selling a share of the company. A tiny part. But if you buy enough shares, you can have some say in the way things go. And you’ll make money from your investment. There’re a few different ways that works:

  • Buying and holding – This is a long-term, traditional way of investing in stocks. Once you buy them, you keep them until you decide to cash out. A solid plan for college money or, better yet, retirement.
  • Investment funds – You don’t buy stocks yourself; you put money into a fund that is run by experts who buy stock on behalf of the fund. You then reap the rewards of steady growth from diversified investments of millions, if not billions, of dollars.
  • Dividends – A stock that is performing well will pay you dividends. You can reinvest these or simply move them to a savings account or spend them.

What is the stock market?

You’ve probably seen a video of a pack floor on Wall Street. People in brightly colored jackets are running around like crazy, paper everywhere, screens full of random numbers. More recently it’s people sitting in front of multiple screens covered in graphs and streaming numbers.

Those people are traders. They are licensed to buy and sell stocks. When you execute a trade, you’re actually asking a licensed trader, or more accurately their algorithm, to make the transaction for you.

The stock market is where stocks are bought and sold by traders. It used to literally be the famous room on Wall Street. Now, almost all trading is done via computers.

Where did it all start?

The first company that sold stocks was the East India Trading Company. Started in 1600 to explore, colonize, and establish trade routes, it is the company that led to much of England’s domination of the world in that era.

Instead of one person taking on the risk of what was an extremely dangerous endeavor at the time, the EITC sold shares to spread out the risk. And that is the draw of stocks. Starting a company takes a lot of money. One person rarely has the money to start and grow a company from nothing.

So they sell stocks. This is known as an initial public offering (IPO) since it’s the first time the public can buy in. Before the IPO, companies are started with anything from cash on hand, loans from credit unions and banks, or maxing out credit cards. At some point, private investors might get involved.

So that’s the basics of stocks. If you want to know more and start investing, talk to someone at your credit union. If the branch you visit doesn’t have someone in the office to help you, they will most likely have a list of people they recommend and trust. Throwing money at meme stocks isn’t the best option—sitting down with an experienced investor and establishing a plan for your investments is a good idea, though. Remember, the point of owning stock is to make money, not make your friends laugh.

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