Both: Hey!
Mike: So Emma, you and I are pretty savvy investors
Emma: You mean how we bought stock in New Unlimited Timetravel Megacorp before they
released the chronocopter?
Mike: Right on the money.
So do you think we should share some our stock knowledge?
Emma: I think we should!
Part one: what is stock?
A stock is a part ownership in a company.
If a company has 100 shares of stock available and you buy one stock, you essentially own
1% of that company.
Most publicly traded companies have millions of shares, so average investors own only tiny
portions.
Mike: Companies typically offer stock in order to expand their business without taking on
traditional debt.
When they start selling those shares to anybody who wants one, they become known as a publicly
traded company.
Emma: Of course, unless you're Warren "The Buffetator" Buffett, most people aren't buying
stocks for ownership rights.
Most stocks are purchased with the intent to grow your money over time.
You can make money with stocks in two ways.
Mike: First way: a stock's value may increase over time as the company grows, so your share
is going to become more valuable.
Emma: Second way: a company may issue dividend to shareholders.
Now let's dive into both.
Mike: (record scratch sound) Big E, I gotta admit, I'm not really feeling that thrill-a-minute,
how to adult experience right now.
Emma: You want to time travel don't you?
Mike: absolutely.
I'm gonna go get the chronocopter ready, I'll be right back.
Emma: While Mike preps our incredible journey, let's talk about part 2, how stocks make you
money.
As we mentioned, one way is by increasing in value after you've bought it.
A stock can go up for many reasons, maybe a company has a new product that seems to
be a hit with the public-
Mike: Copter's almost ready.
Okay, just a couple of things before we go.
Desirability of a stock will drive up two things, the ask price and the bid price.
This stuff is mostly handled by computers and when the ask and the bid prices line up,
ba-da-bing, that is a sale.
Chronocopter: Your chronocopter is ready.
Mike: Nice!
Okay, so before we go, I'm just gonna do two things really fast.
I'm going to put $100 in a saving account and another $100 in the stock market.
Emma: Let's go to the future and see what happens to the money!
(chronocopter music)
Emma: Welcome to the year 2065.
Robot!
Mike: So Emma, let's check those numbers, eh.
Bup-boop-beep-bup-boop.
Oh, look at that.
Future.
Uh, right, Emma, it would appear that my $100 invested 50 years ago has gotten an average
return of 10% and it has become $11,739.09
Emma: Now let's check out the money in the savings account.
It looks like there was an interest rate of .06% per year which means that $100 is now
$103.04
Mike: Which I think can almost buy a gallon of gas today.
Both: Whoa!
Mike: That was a jet-pack crash.
Let's get out of here, okay?
Emma: Okay, okay.
Mike: So Emma, I think we just learned a very valuable lesson: don't drink and jet-pack.
Emma: Also investing can be super helpful.
Although 10% is the average, there will be down years, say when a company releases a
bad product.
But if the market is down 30% one year but up 60% the next year, you're still better
off than when you started.
That is, assuming you are diversified.
Mike: The other way a stock can help you: part three: show me the dividends.
A dividend is a payment that a company will pay to its stockholders from its reserves
or profits.
When a company does well and has excess cash, they will typically either reinvest it to
grow their business or- and- and/or (beep) and/or they will pay out a portion of it to
shareholders.
Emma: Some companies started out with the sole purpose of paying dividends.
For example, REITs which stands for Real Estate Investment Trust, info in the doobly-doo.
Which takes us to part four: how do I invest?
Mike: You can invest by contributing to your company's retirement funds and/or you can
do it privately a through brokerage.
Online brokerages are very popular these days, and once you get the hang of it, it's like,
as easy as making any other online transaction.
Emma: Stocks of course are just one financial tool.
If you'd like to hear about others please let us know in the comment section below.
We would love to hear from you.
Mike: In the meantime, I just programmed the chronocopter to take us to the day when we're
going to reveal the catchphrase.
Emma: And when will that be, exactly?
chronocopter: Date unknown
(X files theme plays)
Mike: By the way we wanted to thank one of our Patreon patrons, who is our awesome person
of the week.
Her name is Mel Harch.
Emma: Hi Mel!
Mike: HI Mel!
Thank you so much for your h- awesomeness.
Uhm.
This is a picture of Mel.
Emma: (excited noises) Yay!
Mike: Yay!
Thank you!
Emma: Thank you.
Mike: If other people would like to become our awesome person of the week, what do they
do?
Emma: Go to Patreon.
Mike: Yeah
Emma: Patreon.com/howtoadult
Mike: Excellent.
Emma: Is that our URL?
Mike: It is, yes.
Emma: Awesome, yes, that is the place.