On American exchanges, such as the NYSE and NASDAQ, there are numerous segments referred to as markets. On these markets, you can purchase stocks, currency, precious metals, and even agricultural goods.
The primary focus is the stock market. However, aside from stocks, you can also acquire other investment instruments, such as bonds and ETFs. Despite their technical names, these instruments are quite straightforward to understand.
A stock represents a portion of a company, a share in its business. When you buy stocks of an American company, for instance, Apple or Microsoft, you essentially become a co-owner of that company and can lay claim to a part of its profits.
There are two main ways to earn from stocks: through a difference in stock prices (bought cheaper, sold at a higher price) or through dividends - when the company shares a portion of its profit with its shareholders. Let's consider an example.
Imagine you have a farmer friend in Texas who offers you to buy a bull with him. Your share in this bull is your stock. If the bull proves successful in breeding, its offspring will be sold, and you will receive a portion of the profit from this sale. This profit is your dividend.
However, if the market value of the bull doubles and you decide to sell your share to another investor, you will earn from the price difference. But in this scenario, you will no longer receive dividends.
Risks are also involved: the bull could fall ill, or the demand for meat might drop due to economic fluctuations. In this case, your share will yield less profit, and selling your share might become less lucrative.
Stocks — when you buy a share in an American company.
How to Earn:
1. Through dividends - when a company shares a portion of its profits with shareholders.
2. Through stock price appreciation - when a company's business grows and the stock price increases.
Suitable for: Investors who are willing to study the market and make informed choices, investing in the right company.