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This lesson is for everyone who's interested in investing, but honestly has no idea how the stock market even works. You'll learn the difference between active and passive investing — or another way of putting it — the difference between picking individual stocks and buying in bulk. By the end of this lesson you'll understand why it's important to think long-term and and ignore what happens in the stock market day-to-day.
Welcome to the Wealthsimple Master Class.
You're about to become an investing genius! Now, if you're watching this, you're at least a little curious about the stock market.
Maybe, that's because you wanna have more money for your retirement or a dream home. Maybe you still wanna leave those kids a grand inheritance. Or maybe you've realized that saying, "I'm buying weed stocks" every time your friends bring up investing is starting to grow old.
What is a stock anyway?
Now, the stock market is a place where companies, like Apple, sell tiny pieces of themselves to raise money for all sorts of things. Inventing new products, building new factories, expanding to new countries, or hiring more people.
And anyone — you, me — can buy those pieces. So when a company in a stock market makes money, everyone who owns a piece of that company profits too.
Who decides how much a stock costs?
Are you still wondering how the value of a stock is determined? What those little green and red up and down arrows scrolling across the bottom of financial news programs mean? Don't worry! We got you! I got you. I have you in the palm of my hands.
Basically, the price or value of each stock is determined by the buyers and sellers in the market. Meaning the last price that someone was willing to sell it or buy it for.
If good news happens, like a drug company gets a cool new drug approved that reverses hair loss, the stock price should go up! If bad news happens, like the company's CEO and founder gets arrested for embezzlement, the price of the stock will likely go down.
Should I invest in the stock market?
Obviously, it has its ups and its downs. If you look at its progress over the last 130 years, you'll see that the stock market has pretty much always grown up and to the right. There, or whichever way right is for you. Which has resulted in more cool technology, more new jobs, more life saving medicine, and more of the important stuff, like Tickle Me Elmos, fidget spinners, Real Housewives shows, and everything else we enjoy.
All told, we like to think of the stock market as a reflection of human progress. Which means, if you think humans will keep inventing, keep making, keep selling, and keep buying things, then the stock market might be a good thing for you to invest in.
Come on, stay with it! This is your master class! Stay with it!