Investing 101

Stocks represent a slice of pie – ownership in a company. Today, you can buy one share of Google for about $500. Google has 330 million shares outstanding, meaning that there are 330 million slices in the GOOG pie (GOOG is the stock ticker you’d type in to get a price quote for the stock). So you pop on your E*TRADE account and plunk down $500 (plus some commission, but let’s ignore that for now). You just bought 1/330,000,000th of GOOG.

1/330,000,000th may not sound like a lot, but we’re talking about an awfully big company here. Keep in mind, you’re not trying to acquire the entire company or have a controlling interest in the thing. You are just trying to take whatever money you can afford to invest and figuring out where to put it so that it will start snowballing. If all goes well, in 10-15 years you should be able to build yourself quite the snowman.

Assuming Google continues to grow, you’re not going to see as big a return on your investment as someone who bought two shares, but you’ll have more money in the bank than if you hadn’t invested at all. So don’t worry so much about the guy with two shares. You just let him live his own life.

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