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How Do Stocks Work?

Today we’ll be breaking down the basics of how stocks work! When you buy stocks, you’re buying a tiny portion of a company. The number of shares doesn’t really matter.  As an example, when you buy one $200 share of Apple you now own $200 of Apple. If you were to buy forty $5 shares […]

Today we’ll be breaking down the basics of how stocks work!

When you buy stocks, you’re buying a tiny portion of a company. The number of shares doesn’t really matter. 

As an example, when you buy one $200 share of Apple you now own $200 of Apple. If you were to buy forty $5 shares of FitBit, you would still just own $200 of FitBit.

Don’t get caught up in this.

Some people believe that owning a higher number of stocks is better than only one, but what makes the difference is the COST of what stock you have. 

The value of a stock can fluctuate due to things like opinions, analyst research, report, news, social media posts, sales, etc.

An analyst is someone who analyzes a company and puts a value on the stock where it is now and where they think it’ll be in the future. Essentially, they’re people who review company and stock value.

When I bought my iPhone, I gave Apple money for their products. If Apple manages that money well, they are able to use it to expand and grow the company. This would increase the value of the stock. If, however, they did not manage it well and the company was to do poorly, any stock I bought could decrease in value from what I purchased it for. This would leave me at a loss

An important thing to remember when dealing with gains and losses is you do not have to sell your stock! 

Typically, increases and decreases happen pretty consistently in the stock market. Chances are, the price will continue to change. Don’t feel the need to sell immediately. Consider just leaving your money where it is! 

If stocks still sound a bit confusing, not to worry! I have so many other resources just waiting for you to dive into! Good luck on your journey to financial freedom!

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