Activity 3: Read “How to make money investing in the stock market?” then answer the questions given below. How to make money by investing in the stock market? The first thing you should know about stocks is they are ownership shares of businesses. What in the world does that mean? Let’s explain. There are over 200 stocks that trade on the Philippine stock exchange. Each of those stocks has a number of shares. For example, San Miguel Corporation has over two billion shares of stock! The owners of those two billion shares literally own the company. If you were somehow able to buy ALL two-plus billion shares of San Miguel Corporation on the stock market, you would have control of the entire company. Of course, this is nearly impossible, considering how much money it would take, and the number of shares available to buy. But think about it. If you buy as little as one share of San Miguel Corporation, you’re now a part-owner of the company. Yes, it’s a very small part of the company, but you’re still considered an owner when you own as little as one share. The same is true for all the companies listed on the Philippine Stock Exchange. If you want to buy shares of Jollibee, Globe Telecom, SM Prime, etc. you’re an actual part-owner of businesses when you buy their shares. With this ownership comes benefits and risks. If the companies you buy stock in are profitable, their stock price will likely rise over long periods of time. However, if you buy companies that are not profitable, their stock prices will likely fall over periods of time. This brings us to the two ways you can make money in the stock market. Two ways to earn with stocks When it comes to stock investing, the first step is buying stock. Once you own stock, you can profit two different ways: 1. The price of the stock can increase. 2. You can be paid a dividend. If you buy shares in a company, and the company is profitable, the stock price will likely increase. If the stock price increases, you can then sell the stock on the Philippine Stock Exchange. You will receive the money you invested in the stock, plus the growth. Also, if the stock you own pays a dividend, you will receive a dividend while you own the stock. For example: If you owned San Miguel Corporation for 10 years, you would have received dividends over that 10-year time period. Those dividends would have been paid to you in cash – you could have reinvested the dividends into more stock, or you could have kept the cash. It’s up to you what you do with your dividends. Now that we know the two ways, we can make money investing in stocks, the next question is. How do we even find stocks to invest in? How to find stocks to buy on the Philippine Stock Exchange There are different strategies when it comes to investing. Some people like to trade stocks over short-term periods of time – this can be buying and selling a stock within a day, a week, or a month. Other investors like to buy and hold stocks for long periods of time. The way you invest will be up to you. Questions: 1. If you buy one share of stock of any company, does that mean you are already an owner of the said company? 2. What are the benefits and risks of buying a stock? 3. When do we say that a stock is profitable? Not profitable? 4. What is a dividend? 5. If you received a dividend, can it be reinvested into additional stock?
Activity 3: Read “How to make money investing in the stock market?” then answer the questions given
below.
How to make money by investing in the stock market?
The first thing you should know about stocks is they are ownership shares of businesses. What in the world does that mean? Let’s explain.
There are over 200 stocks that trade on the Philippine stock exchange. Each of those stocks has a number of shares. For example, San Miguel Corporation has over two billion shares of stock! The owners of those two billion shares literally own the company. If you were somehow able to buy ALL two-plus billion shares of San Miguel Corporation on the stock market, you would have control of the entire company. Of course, this is nearly impossible, considering how much money it would take, and the number of shares available to buy. But think about it. If you buy as little as one share of San Miguel Corporation, you’re now a part-owner of the company. Yes, it’s a very small part of the company, but you’re still considered an owner when you own as little as one share. The same is true for all the
companies listed on the Philippine Stock Exchange. If you want to buy shares of Jollibee, Globe Telecom, SM Prime, etc. you’re an actual part-owner of businesses when you buy their shares. With this ownership comes benefits and risks. If the companies
you buy stock in are profitable, their stock price will likely rise over long periods of time. However, if you buy companies that are not profitable, their stock prices will likely fall over periods of time. This brings us to the two ways you can make money in the stock market.
Two ways to earn with stocks
When it comes to stock investing, the first step is buying stock. Once you own stock, you can profit two
different ways:
1. The price of the stock can increase.
2. You can be paid a dividend.
If you buy shares in a company, and the company is profitable, the stock price will likely increase. If the stock price increases, you can then sell the stock on the Philippine Stock Exchange. You will receive the money you invested in the stock, plus the growth. Also, if the stock you own pays a dividend, you will receive a dividend while you own the stock. For example: If you owned San Miguel Corporation for 10 years, you would have received dividends over that 10-year time period. Those dividends would have been paid to you in cash – you could have reinvested the dividends into more stock, or you could have
kept the cash. It’s up to you what you do with your dividends. Now that we know the two ways, we can make money investing in stocks, the next question is. How do we even find stocks to invest in? How to find stocks to buy on the Philippine Stock Exchange
There are different strategies when it comes to investing. Some people like to trade stocks over short-term periods of time – this can be buying and selling a stock within a day, a week, or a month. Other investors like to buy and hold stocks for long periods of time. The way you invest will be up to you.
Questions:
1. If you buy one share of stock of any company, does that mean you are already an owner of the
said company?
2. What are the benefits and risks of buying a stock?
3. When do we say that a stock is profitable? Not profitable?
4. What is a dividend?
5. If you received a dividend, can it be reinvested into additional stock?
Step by step
Solved in 2 steps
