Do you know what a “Stock” is?
I kid you not, most people don’t know. They run around thinking a stock is like a lottery ticket; you buy and hope it goes up next week so they can sell it and make profit.
When it doesn’t hike up immediately, they say “Oh! I’m gonna cut my loss short, and look for the next opportunity” thinking that they sound smart.
Let’s Make It Simple !
Let’s say your friend has a clothing store.
They’re making good money, and returning profit every year.
Now, you want to put some money in their business, and be part owner. Are you getting in today, so that you flip it next week and make a profitable exit? Probably not.
You’re in it because you see potential in more growth, and you want to make money from the profit that business is generating.
You want your piece of the profit that you’re entitled to, because you own a part of the business. You own a “SHARE“
Share = Stock
If your friend’s business is valued at 1,000,000 EGP.
You put in 500,000 EGP.
You know own 50% of the business. If you put in 50,000 EGP this means you own 5% of the business, and so on.
The more money you put in, the bigger your piece of the company is, and the greater your share of the profit will be at the end of the year.
With Me So Far? Good. Let’s Move On !
If you’re still here, it means you get it.
Now imagine this: You don’t have 500,000 EGP to invest in your friend’s business. In fact, all you have is 5 EGP.
Can you tell them “I will give you 5 EGP and you give me 0.0005% of the business”?
They would probably laugh you out of the room 🤣
Here Comes The Stock Market
The stock market is filled with big companies that are divided into small pieces, and you can grab as much or as little you want/can.
All you need to do is head to your broker’s website – platform – application, search for the company you want to own a piece of, you buy what you want/can, and Congrats! You’re now one of the owners đź‘Ź
Just like in your friend’s business example, you don’t buy a piece just to sell it next week for a slightly higher price. You buy it so you become one of owners in an income generating business, that would pay profit as long as you hold your shares.
Let me try and put this in terms easier to understand:
You know how you love those Profit Shares that your employer spread around every year, only for you to foolishly go and spend it all on a weekend in Sahel ? Well, now you’re receiving profit share from businesses that you don’t even work at. You OWN it
Ready To Buy Your First Stock?
Well, not yet!
There’s more to picking up a stock than just looking around for companies you know.
In this series of WHAT THE HELL I’m gonna take you step by step into what to look for in a company, and how to find the right price to buy at for optimum results.
Next up: “What The Hell Is A Dividend”
