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STOCK MARKET BASICS!

October 11, 2015

Welcome to the spotlight on Business and Markets. Lets talk about the stock market/shares.

 

I am worried by the outlook young people have on financial news. It seems financial news is associated with the older generation, and if you keep abreast with companies and markets you are "so grown up". I would like you to be aware that the stock market is not a faraway thing. Realise how much it relates to your life, from what you eat to the clothing and technology you buy.

 

So what is a share? A business may list on the stock market (Australian Stock Exchange; ASX) and issue shares to investors, as a means of raising capital (money) to grow the business. If you purchase a share, it represents part ownership of the company.

 

Lets have a direct look at how shares relate to your life with the example of Woolworths Limited (ASX code: WOW), one of Australia's biggest food and liquor retailers. Did you know Woolworths Limited is the parent company that not only owns the supermarket chain Woolworths (THE FRESH FOOD PEOPLE), but also BIG W, Masters Home Improvements, Beer Wine Spirits (BWS), Dan Murphy's and Caltex, just to name a few. Therefore if you make retail purchases from any of these stores you are contributing to the company's earnings and profits.

 

Some companies also issue a dividend, which is a payment made by the company to distribute profits/earnings to shareholders, as a way to reward for investing. Why not be involved in a share of the profits the comapny makes from your everyday retail purchasing? There are over 2000 stocks listed on the ASX, have a browse and see if there are any businesses you frequent.

 

Lets have another indirect look at how shares may relate to your life with the example of superannuation. Superannuation is the saving fund you are making for your comfortable retirement. Do you have employment? Then your employer should be paying 9.5% of your salary into your super fund. Money saved in superannuation is invested to grow. Did you know many superannuation investment options involve shares. Therefore if you are not making savvy investment choices during volatile times, you may be losing savings, which in the end will only hurt you (YES WHEN YOURE 65 LOL).

 

As observed, you are in one way or another connected to the stock market, whether you fancy it or not. A level of finance knowledge is essential for decision making and to secure your future. 

 

You can take it as insight, or you can take it as Just BS.

Kit.

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