I had in my head that I wanted to blog for youth interested in investing in the stock market, so I wrote that blog and then my husband read and said: "it is good, but you did not mention their teacher this stock is.." Arrghh@#$%! Why should the man be so sensitive! Sooooo... Here are some suggestions to explain the foundations of the stock exchange and the stock markets simply to your children.
What is inventory? Companies need money to help them grow. They use it for all types of things as the purchase of materials to manufacture their products, development of new products, plants and hiring of people work in their businesses. To do this, they often separate ownership of their companies in small "shares" that they sell to the public. Actions are also called "stock".
Why people buy stock? Shareholders, as purchasers of stocks are known, hoping to buy shares at a low point, cling to their during some time and finally selling it to a culmination. It is a way people make money for shareholders. Generally, the shareholders have an interest in the products or services and its prospects for growth. If your children are nuts on PS3, they might be interested to know that Sony Corporation (NYSE: SNE) fact that the system and that Sony is a company of "public" which is owned by its shareholders.
So when you buy shares of Sony and its profits rise because many people buy the PS3 systems, the value of your shares may also rise. Once again, the forces of supply and demand are the work. In addition, sometimes companies give some of their profits to the shareholders with cash payments called dividends - it is the other way to earn money for shareholders. (Sony is not to pay dividends at the moment).
Who was the first, the Stock or the stock market? Well, decidedly, I really know, but I guess there stocks before the stock market is itself organized. In any event, the stock market is where the shares are bought and sold, called trading. There are stock market in a number of countries in the world, but on the United States, many stock is transferred to the stock exchange of New York and through the Internet, especially on the NASDAQ, but in other sites as well.
Now let's take a brief video tour of the award in New York trading floor.
The main point is that by the Exchange, the price of the shares of the company fluctuates on a daily basis, then the value of your shares is also the top and bottom. This is what makes it important to show ownership in a long-term perspective. This is something that you and your child can watch together and discuss over time.
Why my children should occupy on Stock? Financial markets are a driving force in our world, so having a basic understanding of their functioning is essential to become really smart money. If it were not for the stock market, the companies would be limited in the development of products and services that help improve our quality of life; such things as life-saving drugs, save wind energy, fun films and games, etc.
It is the altruistic side. On the other hand, is that it is a great way to grow your own savings to provide you with these objectives in the long term as College, cars and homes. Through participation in sports, music and community participation projects, we try to teach our children about sportsmanship, team spirit, responsible citizenship, etc. Based in the handling and more money must be part of this discussion because it is also essential to mature adulthood.
The mandatory risk and reward Discussion he time of limitation of liability. Children need to know that there are different levels of risk involved in investments of stocks and better the chance for high reward investment, the more risk there is to lose money. Good research, strong and many and patience are needed.
There are a ton of information online on all this. Just search "explain the stock market to your children."
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