Now that you have started investing, it’s important to understand what you are investing in. On Bumper, you can either invest directly in a company (like Apple or Nike) or in an ETF. We’ll discuss the first option in this Bumper Bite.
When you invest directly into a company, you are trading money in exchange for stock. This stock represents partial ownership of the company. If the company becomes more valuable, your stock becomes more valuable. If the company becomes less valuable, your stock becomes less valuable.
How do you determine what percentage of the company you own? Investors do this by keeping track of shares. Essentially, shares are slices of ownership of the company. For example, if company A to Z is divided into 10 billion shares. If you owned one share, you would own 1/10 billion of the company. That’s not a lot, but what if A to Z was worth over $2 trillion?
Doing some simple math, you can find that each share of A to Z is worth about $200.
Stocks are given various classifications based on their risk and growth potential. The most common classifications are Blue Chip, Value, Growth, and Income stocks.
As we mentioned earlier, you can also invest in ETFs on Bumper. We’ll talk about ETFs next.