Chapters: 0:00 Introduction 1:45 What is a Stock? 2:38 Capital Gains 3:13 Dividends 4:09 What is the Stock Market? 5:04 What is an IPO 6:38 How are Prices Determined in the Stock Market? 10:15 What Happens When you Buy a Stock 10:41 What is a Brokerage Account 13:25 LIVE TRADING DEMO Buying and Selling Stocks
In today's video we are going to break down the crazy world that is Stock Investing. This is going to be a Beginners guide to investing in stocks. On the surface the stock market and investing in stocks can seem complicated and it scares a lot of people off.
Well after watching this video you will feel more comfortable and confident to begin your journey investing in the stock market. And later in the video we will actually go into a trading account and I will show you what that looks like and actually buy some shares of a company.
So what exactly is a stock?
So you have probably heard people talk about buying stocks or buying shares in a company.
The term stock and share tend to be used interchangeably to describe the same thing. A stock is a small piece of ownership in a company, that entitles the owner of the share to have certain rights and also entitles them to be able to participate in the growth of that company. So when you own a share of Tesla, you own a small part of the business and get to share in the company's success.
When a person owns a share in a company there are two different ways that they can profit from owning that share, Capital Gains or Dividends.
A Capital Gain is when the value of that stock goes up, For example say you bought 1 share of Apple for $100 and then tomorrow the price has now gone up to $110, in this case if you were to sell that Share of Apple you would sell it to someone else for $110 and you would have made a Gain/Profit of $10.
A dividend is when a company pays out a portion of its profits to shareholders of the company. Typically a dividend is paid out by larger more established companies for example Walmart, Coca Cola etc. So when Walmart has a good year and makes a lot of money, they will turn around and take a percentage of that profit they made and pay it out as a dividend to people who own shares in Walmart.
So by owning some shares in a company you can benefit from an increase in the price of the stock, or from a dividend payment, or even from both where you are collecting dividends and the stock price is rising so you are getting the best of both worlds.
What is the Stock Market?
There are hundreds of books out there that you can read if you want to dive really deep into the inner workings of the stock market.
But to put it simply, the Stock Market is a place where investors go in order to buy or sell shares from these publicly traded companies. Now this can be for individual investors, or institutional investors or even companies. But the vast majority of trading takes place between individual investors.
What is an Initial Public Offering (IPO)?
Well an IPO is when a Company for the first time decides to go Public and start offering shares of its company on the open market. The company would do this as a way to raise a large amount of capital for the business that they can then use to grow even bigger.
How are Prices determined on the Stock Market?
There are alot of factors that go into what determines the price of company on a certain day.
But the major factor in determining price is SUPPLY and DEMAND.
On any given day, there is a Maximum price that a person is willing to pay to buy a stock and there is a minimum price that a seller is willing to take to sell their stock. You can almost think of the stock market like an auction, where you have investors Bidding on stocks that other investors are willing to sell.
IF there is a large amount of demand for the stock of a company, this demand is going to drive the price of that stock up as investors are willing to pay more to own shares in that company. On the flip side, if there are fewer buyers for a stock and more sellers, this would increase the supply of those shares on the market, causing prices to drop lower.
*This video is not sponsored. All opinions expressed are my own. I sometimes receive products for free from brands for consideration but will disclose when videos are sponsored and I am getting paid to talk about the brand/products mentioned. Thank you for support.
