There are hundreds of ways you can invest your time and your money, some work others don’t. There are also a lot of internet schemes to fool people into buying something they don’t really understand with the promise of huge profits with little effort. Don’t fall on such traps.
This will be the first of a three part post that will cover some ways you can start investing.
Before investing you should always do your research on what’s that investment all about.
“Never invest in a business you cannot understand.”Warren Buffet
Stocks are one of the most common ways and one of the best to start investing because it really requires very little money to begin. So whats a stock? A stock is nothing less than a “piece” of a company. When you buy a stock you own a piece of that company, how cool is that?
Of course, if you buy a couple of Google’s shares you won’t get to tell them what to do and you probably won’t become rich with just that.
So how can you start getting much more money from buying stocks?
Let’s take Alphabet Inc. (Aka Google) example. Today (June 02/2019) Google shares are at $1,106.50 which is the price you have to pay to get one share. The price one year ago was at $1,153.04, so if you bought shares exactly one year ago and you sold them today your balance would be $-46,54.
That’s not a good deal is it?
But what was the price 5 years ago? On June 06/2014 Alphabet shares were at 566.03USD. If you bought then and sold now you would have profited 540,47USD per share.
Now that’s a good deal.
So a good idea often is to buy shares of a company you believe it will grow in time and sell when you feel it’s a good time.
You may think now it’s a bad time to buy because the prices are too high, but you would have said the same thing 5 years ago.
Investing takes time.
But buying and selling when the stock is valued at a higher price is not the only way to get money. Some companies offer dividends.
A Dividend is what the company pays you just because you own that stock. You don’t have to do anything for the company after you buy a piece of its pie. Different companies will pay different amounts of money and usually do it annually or quarterly.
Google isn’t one of these companies that pay dividends. If you buy a google stock you only make money if you sell that stock at a higher price.
AT&T with a share price of $30.58 is worlds largest telecommunications company and you can buy one stock and earn dividends for as long as you keep it. AT&T pays dividends quarterly and on the last payment, shareholders received $0.51 per share.
You can’t really live a life with $0.51 per quarter but the more stocks you own, the more it adds up to the total you receive.
It’s called Compounding.
“Compound Interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… pays it.”Albert Einstein (supposedly)
You can calculate Compound Interest through here: Compound Interest Calculator.
*These are affiliate links, if you buy from them I will earn a very small commission and you won’t have to pay more for it.
So do you have a company you understand and want to invest? Does it go with your values and your financial goals?
Good, now get started!
Do you currently own any stock? How would you explain the great power of Compound Interest?