You’ve heard of a lot of people making a lot of money in the stock market and now you want in. But what exactly is the stock market? Well, you’re in the right place bella! We’ll explain it to you in simple terms.
The stock market is made up of a lot of companies, like Target, Apple, and Amazon, that want to make and raise money. In order to make and raise money, they offer pieces (shares) of themselves for a price. When you buy a piece/share of the company, you become a partial owner of the company.
How do you make money in the stock market though? In order to make money in the stock market, you need to buy the share at a lower price than what you sell It for. For example, you really like the store Target and decide that you want to buy some shares of Target because you believe that the price in a few months/years will be higher than what it is now.
You buy a few shares at $180 each, and a few months later, the price increases to $220. You would make $40 for each share that you bought. Note: It’s a good idea to keep your stocks/investments for over a year to avoid paying short-term gain taxes.
Also, keep in mind that there’s always the possibility that if you buy a stock, it will go down in price a few months/years later, that’s why it’s recommended that you have a diversified portfolio to decrease the chances of losing money. A diversified portfolio is made up of stocks from various different companies. If one of the companies goes down in price, you can offset the loss with the gains of the other companies.
So how do you buy stocks? One of the easiest ways to buy stocks is only through an online broker. Some online brokers that you can use to buy stocks include Robinhood, Charles Schwab, Fidelity, and Ameritrade. After opening an account, you will need to deposit money into it in order to be able to buy stocks. Once you do that, you’re ready to go! You can start investing a small amount and once you feel comfortable, you can invest more money. What’s stopping you?
Here’s an interesting statistic that can motivate you: according to the Pew Research Center, only 28% of Hispanic households invest in the stock market. If others can do it, so can we! Let’s start making some changes.