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Make Your Money Work for You

An Introduction to Investing

Connor McGill, Business Columnist

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It seems as if all the rich guys have a secret. Perhaps they meet every Saturday night and devise a new scheme to take your money, or perhaps they have ties to the government and just print new money… or perhaps it is pure luck.

Hardly.

Bill Gates (Microsoft), Jeff Bezos (Amazon) and Warren Buffett, with their collective wealth over $100 Billion, all have one major thing in common  – they became rich through stocks.

During the first half of this series, I discussed various ways for teens to supplement their income. With small businesses running and money in the bank, it is now time to lay the foundation for a prosperous future.

Previously I explained how refraining from common discretionary items could lead to a very comfortable retirement with a Rolex, Ferrari, yacht, and more. The explanation behind this seemingly impossible triumph is one that is grossly underestimated – investing.

To invest money means to place money in an asset (such as a stock), with the intention of that asset appreciating (going up in value) over time.  Here we will focus on one of the best assets to invest in – stocks.

A stock is a small piece of ownership in a company, one that average people like you and me can buy. Because I own stock in PayPal and Amazon, for instance, I am a part owner of those companies.

Pretty cool, huh?

Over time, people buy and sell these stocks, as they either go up or down in value. What’s more, if the company is doing well, it may pay you part of their profits every year, which is called a “dividend.” This is where the real magic happens.

When you get money from the company and reinvest (put it back in) the company, you own more and more stock of that company. This, in turn, brings the value of that holding up over time. The power of this type of investment cannot be understated.

Let’s say that you have saved a little over $6,000 and want to invest in Nike stock. You buy 100 shares at $61 a piece. Assuming the value goes up and the company constantly returns annual dividends, without putting ANY MORE MONEY in, you would have nearly half a million dollars by retirement age!

There are of course risks in investing, but the potential payoff of investing wisely is significant. Would you rather live a menial life safely or live a lavish one having taken some risks?

The secret to wealth is very un-glamorous. It involves patience and discipline.

Our next column will discuss how to get started, but in the meantime, keep hustling.

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