When you created a lemonade stand or sold Rainbow Loom bracelets as a kid, you were investing your money. Investing is simply the act of using money or resources with the goal of making more money in the future.
For example, if you started a bracelet business, you would have to purchase the materials necessary for making the bracelets. This could include the Rainbow Loom strings, the board, and the pick. This initial use of money was an investment; you used money with the goal of making even more money from the business.
Just like you can invest in a lemonade stand or bracelet business, you can invest in companies. At a basic level, when you invest in a company, you are giving them money in exchange for partial ownership of the company.
You read that right. When you invest in Apple, you are a partial owner of the company. That’s pretty cool. If Apple becomes a more valuable company, your slice of ownership also becomes more valuable. You could then sell that slice of ownership for money.
We’ll talk about what makes a company valuable later. For now, just remember that investing is simply the act of using money with the goal of making more money, and when you invest in a company you are receiving partial ownership of that company.
Up next, read about the Risks and Rewards of investing.