Most people have heard about stocks, be it from the newspaper, a friend or a very interesting high stakes movie about a savvy businessman. But what are stocks and why are they considered a great investment opportunity? In this article we tackle what are stocks. Have in mind that this is also the beginning of an article series on a detailed guide to stocks so be sure to keep up with the blog if you want to know more are you ready? Let’s go!!!!
What are Stocks
Well our friend Google says that: A stock is a general term used to describe the ownership certificates of any company. A share, on the other hand, refers to the stock certificate of a particular company. Holding a particular company's share makes you a shareholder.
Let’s do an example of what stocks actually entail.
Westfield Restaurant is a small restaurant that is doing extremely well, the owner now wants to expand the and open up a new and bigger restaurant. The problem is that the owner only has 10,000$ but he needs 100,000$ to expand. He could take on a loan but he thinks that it would be a liability. The owner then decides to sell a piece of his restaurant (share) to investors to help raise money to expand the restaurant. These are now stocks. Each stock is worth a certain amount of money based on the company’s worth. You get the picture right?
In the above Example the Restaurant owner was able to gain the money that he needed to expand his restaurant without accruing any debt or risk. This analogy goes into just how stocks work when you buy them.
When you buy a stock in Apple or WalMart , you in buy into the ownership of the company.
So now you know, however, you should know that not all stocks are the same and there are different types of stocks which we will discuss in dept. in the future in our miniseries on stocks.
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my name is Andrea Dutch, just an average female on this earth with a passion for sharing.
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