“Never depend on a single income. Make investments to create a second source.”
Hey Black Girl,
What is one thing that has been consistent in creating income over the years? I bet your first thought was real estate. Close! We’re talking stocks. Over the next few months we will have various posts on stocks and the stock market. Consider this your introduction.
Throughout these posts, I want to help you with understanding how stocks work, how to get started, and what to look for when buying stocks. I know how intimidating investing can be and there’s no way I can cover EVERY SINGLE thing but the idea here is to make you more comfortable with the idea of investing.
So what are stocks and how does the stock market work? Stocks are a representation of partial ownership in a public company. With that being said, if you own one share in Apple that does NOT mean you’re on your way to becoming the next Steve Jobs. It means you have partial ownership in the company. 1 share = a fraction of ownership in the company. For example, say that a company has 200 thousand shares and you buy 25 shares you now own 0.000125% of the company.
Stocks are bought and sold on stock markets, which bring together buyers and sellers of publicly traded company shares. Stock markets operate kind of like auctions, where potential buyers name their highest price (“the bid”) and potential sellers name their lowest price (“the ask”). The actual price a trade is executed at is somewhere between the bid and the ask. The difference between the ask and the bid is referred to as the “bid-ask spread”.
The stock market in the US is made up of 13 exchanges, the best known are the New York Stock Exchange and NASDAQ (we’ll dive deep into these in a separate post). The Nasdaq Exchange is the world’s first electronic trading floor on which companies (often tech companies) list their shares. While the New York Stock Exchange is the world's largest equities based stock market, located in New York, hence the name. Regular trading hours are 9:30 a.m. to 4 p.m., ET, but the major U.S. stock exchanges close early on certain days ahead of or just after market holidays.
The main point of investing is to make more money than you spend. That’s it! Unfortunately, life isn’t that easy and actually gaining a large profit is difficult and requires patience. Think of all the people who invested in Amazon or Apple in the early 90s/2000s. It took them years to reap those benefits.
So, how do you get started on your investing career? If you’re new to investing, I highly recommend signing up on robinhood.com. Follow this referral link for a free stock https://invite.robinhood.com/stanleh56
There are only two ways to make money in our modern world: by working, either for yourself or someone else, or by having your money work for you. Over these next few posts we’ll slowly unravel this monster of a topic. We’ll cover various topics such as recession talks and what this means for the economy, different trading tactics, what is forex and how it differs from the traditional stock market, cryptocurrency, and much more. Below are some of my favorite resources for you all to do your own research on investing and how to get involved. Until next time!