Imagine the stock market like a big supermarket, but instead of buying groceries, you’re buying little pieces of different companies. When you buy a share, you become a small part owner of the company.
Like the price of an apple in a supermarket, the price of a share changes based on how many people want to buy it versus how many want to sell it. If there are more buyers than sellers, the price goes up, and if there are more sellers, the price goes down.
Several things can change these prices. If the company is making good money, more people might want to buy the shares, pushing the price up. The overall health of the economy can also change prices. If the economy is doing well, people feel more confident investing, and stock prices can go up.
The level of interest rates also has an effect. When interest rates are low, people can get a better return from buying stocks than keeping their money in a bank, so more people might buy shares, driving the price up.
Finally, if investors are feeling positive about the future, they might buy more shares, which can push the price up. But if they’re feeling negative, they might sell their shares, which can bring the price down.
Investing in the stock market is risky because the price of a share can go up and down. You could lose money if you sell your shares for less than you paid for them. But, if you pick the right companies and they do well over time, you could also make a lot of money.
If you’re thinking about investing in the stock market, make sure you understand the risks and do your research. It’s also a good idea to talk to a investment advisor or portfolio manager for personalised advice. And always remember, investing is not just about making quick money, it’s also about learning and enjoying the journey.
