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Why are stocks worth anything?

Why are stocks worth anything?

Postby delsy89 » Thu May 09, 2013 12:54 pm

Does a stock give you a percent of its profit to you?
I know that you buy it to own part of a company, but what is the point of the stock of you don't get anything from it unless you sell it for more?
Why do people keep buying stocks?
this is very confusing to me!!!!
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Why are stocks worth anything?

Postby stevenson15 » Thu May 09, 2013 12:58 pm

"Why do people keep buying stocks?"

To create financial wealth, why else?

The only way you'll be financially independent is by investing.

You won't do it working for someone else. Since most people work a "job," their only hope of financial independence is through investing.

Either you will invest in yourself and an idea, or you will invest in someone else doing that. Or you choose not to do that and your finances go nowhere.

Ignoring your money and future finances is just silly. Get the book, Investing for Dummies from your local library for free.

You are at risk of not having enough money for retirement. If you were to get sick or hurt or lose your job, you are at risk of not having enough money to get by until you are well. There are lots of reasons you need more money than you have in the future, like sending kids to college.

You cannot avoid risk; it is ever present. A savings account is low risk, but doesn't grow your wealth. Stashing your money under the mattress seems low risk, but inflation eats at it, there could be a fire, rats eat it, or it could be stolen. There is no way to avoid risk. You can manage your risk wisely, or you can ignore risk and leave it to chance.

You can either work for money, or let your money work for you.
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Why are stocks worth anything?

Postby stefano » Thu May 09, 2013 1:15 pm

When you buy shares in a company, your are hoping that the company will perform and profit in the future. Based on innumerable events that take place in the world, share prices go up and down over time. When you buy shares in a company, you are basically hoping that the share price goes up and if it does, you will make money. You can also buy dividend paying stocks. A company that pays a dividend every quarter pays you a certain percentage of its earnings every quarter for as long as you own the shares. For example, McDonald's pays a 3.2% (annualized) dividend rate every quarter in cash.
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Why are stocks worth anything?

Postby lotharing » Thu May 09, 2013 1:30 pm

It is a little bit like gambling and people like to
take chances on making money. If you are a
long term investor and hold on to what you got,
then in your retirement years you should have
a nice nest egg of money. People that jump in
and out of stocks are called traders. Not a good
way to go for a beginners.
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Why are stocks worth anything?

Postby bhradain » Thu May 09, 2013 1:51 pm

Some companies pay dividends and that is essentially part of their profit. The idea of owning stock is to delay spending now in anticipation of having more money to spend later when you sell the stock and its worth more.
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Why are stocks worth anything?

Postby tait49 » Thu May 09, 2013 3:47 pm

Yes, stocks allow you to own part of a company. Depending on how much of it you own, you get money based on the company's profit.
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