| We all dream of the day when we can be in our | | | | stock? I will take an example of a company called |
| house sitting on a sofa sipping nice tea along with an | | | | XYZ, newly formed and into the business of selling |
| assortment of cookies and in the meantime you | | | | shirts. This company XYZ will need money to buy |
| know that every minute there is money rolling into | | | | machinery, raw material, pay for employees salary |
| your bank account . Talk of good times and if wishes | | | | etc and the money will come in the form of loans, |
| were horses then everybody would ride them. | | | | money from friends and family and also you sell |
| Yes, in theory the above can be true but there are | | | | some part of the company to other persons or |
| two ways to do that , the first one to start a | | | | companies. How do you part with ownership of the |
| company, make it profitable, sell a a majority share | | | | company is that you create shares or parts of the |
| to somebody else then reap the fruits of your labor | | | | company for say $10 each . Let us say you create |
| through that minority holding in that company. The | | | | 100 shares of the company , that means the total |
| other way is less labor and you can get started with | | | | share capital of the company is $1000. Now ideally to |
| as little as $1000. Start investing in a company you | | | | maintain a majority shareholding XYZ company can |
| like on the stock market,once you own the shares | | | | sell 49 shares and still be a mahority shareholder. |
| you become the part owner of the company even | | | | Now let us assume that you are the person who |
| through the part ownership may be only .002% of | | | | bought 49 shares of the company XYZ at a price of |
| the company. But hey, you are still an owner and as | | | | say $10 only, the company is making decent amount |
| you learn the stock market basics, take some risks, | | | | of profits, then you would like to sell those 49 shares |
| reap some rewards you can play bigger and become | | | | to someone who is willing to pay more than $10 to |
| an owner of a bigger part of the company. | | | | you. The place where you could Ideally go to buy or |
| Before you take your cheque book out and start | | | | sell something is a market and that is what a stock |
| looking at companies to buy for $1000 , you should | | | | exchange is all about, a place to market your shares |
| know the stock market basics and then start | | | | or let us say either buy or sell the shares of the |
| investing to make more money. It is absolutely very | | | | company XYZ. |
| important to understand all the stock market terms | | | | Conclusion |
| and technical lingo which gets thrown around quite a | | | | This is in simple terms what is a stock and what is a |
| bit to make some serious money in the market. | | | | stock exchange. |
| Let us get the initial understanding of what is a | | | | |