What’s a Stock and Why The Hell Should You Care?
There are sure to be lot’s of questions you ask yourself over the course of any given day. “What should I have for breakfast?”, “Where did I put my car keys?”, “Why am I working at a job I hate?”, “Why do I try to drink away my career-based sorrows?”, “What’s the meaning of life?”, “Was that chick just checking me out?” and more than likely, “Why wasn’t that chick checking me out?”. But the number one question I ask myself every single day is “What have I done today to increase my net worth?” Now, obviously there is lot’s of advice out there on the best ways to get rich, but there are really two main things you gotta do: earn more than you spend and invest in businesses. Seeing as most people don’t have time to run a full-time business on the side, the next best thing is to own stocks. Which then begs the question: What’s a stock?
Today’s post will be all about what a stock is, why it’s useful, and how you’re going make mad money using them!
What’s a stock
I’m going to make this really easy for you. Let’s say you and I start a business selling beer steins. Yeah, I know, we’d be rich. But let’s say that it’s just you and me running the business. You take care of the marketing, accounting, operations, and product design, and I check the product to make sure it holds the beer and doesn’t affect the taste. We both own the business, and agree to split that “ownership” 50/50. I own half, and you own half. That means that if our company makes a net income of $100,000, you get $50,000 and I get $50,000. Not bad for being a glorified beer taster. (“Net Income” sounds like a scary accounting word, but don’t freak out. It just means the money left over after all the costs).
Now, let’s say we wanted to split the company into 500 pieces. Why? Because I said so, that’s why. I would own 250 of those pieces, and you would own 250 of those pieces. 50% x 500 = 250.
If I’ve blown your mind, please click the following link to learn math.
If I haven’t, let’s continue. These individual “pieces” of ownership of a company would be considered the shares of stock. So, a stock is simply a small slice of a company. These individual slices are called shares.
So when you buy stock in Apple, you’re really buying a very tiny piece of that company. Look at you go! YOU OWN APPLE! You’re like Steve Jobs reincarnated! Hopefully you’re slightly less of a dick than he was…
Now that you own a share of Apple, you are called a shareholder. This comes with certain rights and privileges. The one that you’re concerned about is now that you own a piece of Apple (HA! PIECE OF APPLE! GET IT?! LIKE THE FUCKING FRUIT?! LIKE YOU OWN A PIECE OF FRUIT?! HOW RIDICULOUS!!!), you have a right to some of the income that Apple makes. And this is the joy of stocks! You can keep some of the money that Apple makes without working at Apple, managing Apple, running Apple, or being Tim Cook. You don’t have to do anything, except buy the stock. AMAZING!!!
What a stock isn’t
Here’s where everyone gets confused and needs a simple explanation. When you buy a stock, you are PURCHASING A SMALL PIECE OF OWNERSHIP!!! You are NOT giving the money to the company! You are not loaning them money, you’re not donating it, and you’re certainly not giving to the company for ownership.
The only place you are ever going to buy a stock is in the open market, from other investors. So if I decided to invest in Disney, I would buy their stock. If you then wanted to buy it, then your broker (Charles Schwab, Vanguard, T. Rowe Price, someone) would then find a person who already has Disney stock and wants to sell (someone like, I don’t know, me). I would then sell my Disney stock, and you would buy it.
Now, imagine this, except on a global scale with literally trillions of dollars changing hands every day. People, companies, investment trusts, and a whole bunch of other organizations I don’t want to explain are trading stocks, bonds, currencies, oil, corn, mortgages, insurance. You name it, it’s being traded. But for now, let’s just worry about stocks, not all that other crap.
Why you need more stocks in your life
Here’s the kicker y’all. Here’s the big secret, the one you’ve all been waiting for. The secret to getting rich is by sending me money free of charge, along with any inheritance you might have. I also accept meals, hugs, winks, and a quick pinch on the ass.
The secret to getting rich is OWNING AS MUCH BUSINESS AS YOU POSSIBLY CAN. There has been no better way of building wealth throughout any part of history in any part of the world than just OWNING BUSINESSES. The only argument you could possibly have is, “Nuh uh Paul. I could win the lottery or I could marry someone super rich.” Well, I hate to break it to you honey-bunch, but you ain’t that lucky and sure as hell ain’t that pretty. So get over it and listen to me.
#jk #uraqt #pleasedonttellonme
Why stocks are the best thing since sliced bread
Here’s the thing about owning businesses: not everyone has the time to run one, or the risk appetite to start one on their own. I mean, if I asked any of you to just start a company tomorrow, do you think you could do it? I’m sure a lot of you actually could, but your risk appetite really doesn’t allow for you to just do that sort of thing. So, if you need to own businesses to get rich, but you don’t want to start a business, what options are you left? You could:
- Buy a business – somewhat viable option, though pretty tough if you have no experience doing this sort of thing. I mean, it’s not like people are born just knowing how to run a hardware store or a comic book store. Plus with all the crap you’d have to go through with lawyers fees, brokers fees, and reading up on accounting and marketing, you’d probably be a mess.
- BUY STOCKS – Holy Shit, how did you know this was the next option?! You are such a smart lil’ buttercup. But seriously, because stocks are basically just tiny pieces of businesses, you could buy as much, or as little, stock as you want and allow that to be your path to riches.
WAIT A MINUTE, DID WE JUST CRACK THE CODE TO RICHES?!
Unfortunately, not quite. There are still a lot of things we haven’t answered yet. Things like:
- How much stock to buy?
- Which companies to buy?
- Are there any other financial instruments I should use?
- How exactly do I buy a stock?
- What’s a stock market?
- Should I buy a private airplane or helicopter?
- How much money do I need for Emily Ratajkowski to date me?
And we’ll get there, dear reader, we’ll get there. But for now, here’s what you need to know…
What’s a Stock – The Wrap Up
Here’s what you need to remember: The way to get wealthy is by owning businesses, because (good ones) make income. Stock represents ownership in a company. Each piece of stock is called a share. You can either start a business or you can buy a business. However, since most people don’t have the time or risk tolerance for starting or buying an entire business, the next best option is to buy a piece of a business. This is what stocks allow you to do! Stocks don’t require you to run a company, but you still get the monay monay. THEY ROCK!
For more tips and tricks on how to achieve your version of financial freedom, check out:
- The Seven Steps to Avoid Being a Money Moron
- The 7 Vegetarian Meals That Are Saving My Budget
- How Much Is Half A Million Dollars?
- The 10 Best Finance Books Money Can Buy
- 9 Credit Score Hacks You Must Know
- Why I Never Want To Retire
- The Laziest Way to Riches – Investing In Index Funds
- Budgeting Basics – Allocating $$$ Like A Boss
- Fuck You, Frugality
- Why A Million Budgeting Tips Will Never Be Enough
Keep trying to crack the code,