Owning stock means owning a piece of a company.
Invested funds are working for you 24/7.
Invested money can grow much faster than cash in a savings
account.
Ever wanted to own part of a great business? That’s exactly
what happens when you purchase stock. You’re buying a part of that company. As
a part owner, you’re entitled to a share of the profits and assets of that
business.
You profit from owning stock in one of two ways.
The company can decide to return money to their shareholders
via dividends. This is cash that is paid to you on a regular basis for being a
shareholder.
The business grows and the price per share increases. Once
you decide to sell your shares, you pocket the returns.
While money kept in a savings account gets eaten away by
inflation, invested money is working for you 24/7. Unlike a bank account, your
original outlay can multiply many times over if you invest in the right
companies.
On average, the stock market has returned around 10%
annually since 1974 (without factoring in inflation). That easily beats the
0.5% you’ll get by keeping your money in a savings account.
Financial Goals
Investing: Start small, but start now!
$2,000 can turn into almost $100,000 after 40 years (at 10%
return a year).
Investing in stocks can help you pay for your biggest goals.
That 10% average increase may not sound like much, but given
time, this interest compounds to produce incredible returns.
Imagine someone told you that you could turn $2,000 into
$100,000 with no work whatsoever? It sounds too good to be true, but it’s completely
possible if you understand compound interest (which will be discussed in the
next lesson).
The key element to remember here is time. The longer you
have your money invested, the more powerful compounding becomes. That means the
younger you get started, and the more patient you are, the greater returns you
will reap in the future.
However, you don’t need $2,000 to get started. You can start
small and keep adding to your investment over time. You’ll be amazed how
quickly your investment can grow. In fact, if you added $100 a month to that
initial $2,000 investment, after 40 years you’d have close to $1 million.
You’ll have both winners and losers, but if you learn how to
identify good companies, you’ll have some stocks that multiply 10 times (or
more) in value over the years.
The biggest advantage you can give yourself is to start
early and let that compounding work its magic.