Do you want to invest in a company?
Nowadays a person can invest through his computer, without even leaving his home. There are many types of companies available to invest, some of the most popular options are: technology companies, robotic companies, video games, energy, renewable energy, these are just a few examples, since there are many options available.
But first of all, we'll explain how to invest in a company. This is usually done through actions or stocks.
What's a stock?
A stock is basically a piece or ownership of a company. Say, for example, you purchase a stock or a share of Google. You now OWN a piece of Google, you own a really tiny fraction of this company, because we are talking about Google, a reaaaally big company. Same thing goes with Microsoft, MC Donald’s, Facebook, etc., there's a lot of different options out there.
So, when you purchase a stock, you are buying a piece of a company.
Why do people (or investors) buy stocks?
Typically, most people do this in order to invest. Why invest in companies? People do it to gain revenue or gain financial money that they can use to build or grow the company.
So, let's see an example. Basically, let's say I'm starting a... paper company, for example. So, I'm starting a company, let's call it “Dunder Mifflin”. So, I've already invested tons of money on it, and now, the company is worth $100,000.
So that's great, I have a company which is worth $100,000, but in order for this paper company to grow, and grow larger, to make more money and sell more products I need more equipment, I need to increase my staff, etc. All of the things mentioned before take a lot of capital, it takes a lot of money to make that work.
So, how do I get this money? Instead of going to a bank, or borrowing the money, which can maybe be not profitable, or maybe they don't even loan it for me. This is what stocks are really for. Is, I give, or technically sell, a piece of my company.
So, in this case, if I need $100,000 I will get other investors to "donate" or invest some money in my company. So, let’s say I have 3 investors, one invests $30,000, the other one $20,000 and the third guy invests $50,000. So, I'm on my way to get the $100,000 that I need. Yes!!
So now I get this investors' money, and they own a big part of my company. I can "give away" a part of my company, a little quarter, etc. So these investors are hoping, by making this investment, they are looking for a financial gain. As the company grows (let's say it grows to $200,000) the investors also double their money. For example, the person who invested $20,000 now became $40,000. Now, if it doesn't grow further, or if it declines in value, the investors' stock is actually worth less.
So that's basically what a stock is. The investors take a piece ownership in my company in light of my company growing.
Both parts (investors and the company owners) benefit, because the investors are looking to be a part of a company, anyone, MC Donald’s, Intel, Facebook, there's thousands of options out here that are looking for capital in order to promote products, in order to promote and sell and they need financial backing, and they get it from thousands of people by investing in their company. The company benefits from the investors, and the investors benefit as the company grows.
If you are interested in investing in different firms or companies through stocks, you should get in touch with AG-Markets.