What is a stock? Should you invest your money in the stock market or put it in the bank?
What exactly is a stock? Should you put money in the bank, or should you consider investing in the stock market? [music] Hi, I’m Troy Sharpe, CEO of Oak Harvest Financial Group, CERTIFIED FINANCIAL PLANNER™ Professional (CFP®), host of The Retirement Income Show, and author of the upcoming book, Core4.
When we think about where we’re going to save money, we have two choices. We can invest it, or we can save it in the bank. In the bank, we don’t tend to make a lot of interest. The basics of what a stock are, what you need to know, and if you should invest in stocks, this video will help you make that decision. Look at Microsoft. Microsoft, right now, is trading at about a $136 a share. So, if you have a $136, you can buy a share of Microsoft.
Just for owning that one share of Microsoft, they’re going to pay you a dividend of $1.84 per year, which is 1.38%. Now, I don’t know about you, but you’re probably not making 1.38% with money in the bank. Simply for owning Microsoft, they’re going to pay you 1.38% as a dividend.
Now, if Microsoft, if you use Microsoft products, if you’re a fan of Microsoft, if you think Microsoft, the company, is going to grow in value, sell more products, make more money into the future, your principal investment into Microsoft at $136, it has the potential to grow much more than just the dividend that you’ll receive. Right now, Microsoft makes about $5.06 earnings per share.
That means every share that Microsoft has outstanding, on average, they make about $5.06 in profits per one share. They give you $1.84 in the form of a dividend, and if Microsoft continues to grow and sell more products and make more money, your investment could potentially increase over time with Microsoft. That’s the basic of what a stock is.
You want to own stocks, want to build wealth, and to create value in your portfolio over time, much better option than sitting money in the bank earning very, very little interest.
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