I'm 15 and could somebody please explain what stocks are and how you make money investing off them ?

[Jesse]

everyone i know says investing is the way to go if you want to make money but i don't know what is actually is what does it mean investing or buying stocks ?

[Auroch]

Buying stocks is YOU lending money. If you have a wad of money, you can buy stocks like Ford Motor Company. That means that you loaned them $17 a share. And if the price goes up you can later sell them at a profit. But if the price goes down, you lose.

One thing the market can do is take everything you have and never think a thing about it. Lots of people have lost their entire fortunes in a few days. So be careful.

You're too young to invest yet - but you can pretend. You can go to E-Trade or something like Marketwatch and pretend you bought a bunch of stock. Let's say you have $10,000.... what do you want to buy? So you buy some Ford and some GM stocks - note them down on your "portfolio" on Yahoo..... and just see if they grow or whether you lose your money.

As time goes by, you just keep reading little things about stocks trying to understand them. Just keep in mind that even people who have been buying and selling stocks their whole lives can lose their shirt - so nobody is immune to loss.

[Bob]

A stock is an ownership share in a corporation. Each of these shares denotes a part ownership for a shareowner, stockholder, or shareholder, of that company.

When a company releases an IPO (initial public offering, when a company offers shares to the public), investors can purchase these shares and will be part of owning the company.

There are two types of investors, value and growth investors.

Growth Investors:
Look for smaller companies with high growth potential.
Do not look for companies that pay dividends (a portion of profit paid to the shareholder); they would rather see that cash kept and used productively by the company.
Look for high P/E ratios, a measure of stock price compared to net earnings per share.
Have speculation; generally more risky.

Value Investors:
Look for larger, established companies with long history of stable earnings, good reputation.
Look for dividends!
Look to buy shares that are currently selling at a price below their intrinsic value.
Look for low P/E ratios.
Generally less risky, “buy and hold” mentality of long-term investing.
Like to invest in large-cap stocks (Facebook, Apple, etc.)

You make capital gains (money) by purchasing stocks, and if the demand for the stock(s) you invest in goes up, so does the price. Therefore the market value of your stock(s) go up, and you can sell this, therefore liquidating your assets.

For example, if you purchased a stock from Tesla Motors on January 13th, 2013 for $22.79. You decide to sell it today, January 16th, 2014 for $170.97. The capital gain is made from $170.97 minus $22.79, = $148.18 minus transaction fees from your stock broker.

Another way of making capital gains is if you short-sell.
It is the practice of selling shares of stock that have been borrowed from a third party in exchange for a fee, with the intent of buying these shares back on a future date to return the lender.

Short-sellers believe that the market price of a stock is going to drop and so they borrow stock and sell it now at the current price before a pre-arranged future date to return shares to the lender.
Short-sellers make a profit if they speculate correctly and the stock price falls, but they lose money if the stock price increases because they are forced to buy back these shares at a higher price so they can return them to the lender.
A short seller’s profit is the difference between what they sell the borrowed shares for and what they are forced to pay in the market to buy back these shares for the lender; minus fees, commissions paid to the broker/lender.

[Donut Tim]

Whoever owns the shares of stock, owns the company, no one else. When you buy a share of stock, you are one of the owners of that company. It could be any of over 13,000 companies that have stock such as McDonald’s, Coca-Cola, Amazon.com, Ford, Krogers, your local bakery or electric company.

As a company earns money, it becomes more valuable and this value is reflected in the price of its shares on the open market. You collect this increase in value when you sell your shares for more than you paid for them.

The company’s board of directors decides what to do with its net earnings.
â–ºSome or all of the earnings may be re-invested in the company so it can grow, open new stores or make repairs. When this is done, the earnings money is used up but the company is more valuable by that same amount.
The per share price, having increased because of the earnings, retain that increase when the earnings are re-invested in the company.
â–ºSome or all of the earnings may be given directly to the shareholders as dividends. They just mail you a check or send the money to your brokerage account. This makes the price of the stock decrease by the same amount as the dividend, so you have the same value in the total of stock and dividends.

Since you are an owner of the company, the members of the board of directors work for you. Each year you can vote for each member, one vote for each share that you own.
If you don't think the present board members are running your company properly, vote them out. You can inform the board of your ideas, concerns or recommendations and these carry the weight of your shares.

You are also protected when you own stock. For instance, if your company gets sued and loses more than it can pay, the law cannot come to you the owner, and confiscate your house or other property. The shares may become worthless, but that is all you can lose.
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If you buy stock hoping that you can sell it for a quick profit because of the daily or monthly swings in price, then you are gambling rather than investing. You are trying to guess better than the public, including professionals, how the price will change.

To invest, choose a company that has steady earnings each year instead of losses. If your company has very little long term debt, it will likely not get into financial trouble.
Buy quality stocks and hold on to them. When you hold these over a period of time, the per share prices will go up for a real reason - the companies are earning money every year and becoming more valuable. This is not gambling.

If you save a portion of your income each payday and invest in stocks, over the course of several years you can grow very wealthy indeed. It is like hiring someone to get a job and earn money for you, and then using that money to hire more workers. Your money grows geometrically.
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[Twopointer]

a common stock is a share and shares are traded at a market called a stockmarket, when a lot of people want to have the share the prise or the course so it is called on the stockmarket can go up. Or when there is some bad news or when a company did not tell on time the financial sistuation of the company the course can go down, you read it can go but not certain what happens.

thus when a company pays a dividend you get dividend in cash or in stock depend on the amount of shares the person have and the height of the dividend and the stockmarket or the country where the company is situated

on a saving account you get after a year 1%, but wehn the dividend per share is less then you would get when you put the money in a saving account, then it is probably that a person sells the shares and have a gain or a lost, sometimes it is better to have a lost on shares