A Beginner's Simple Guide to Stock Investing

Have you ever wondered how people grow their wealth outside of their day job? Or why some talk about “owning part of Apple” or “investing in Tesla”? They’re talking about stocks, and yes, you can do it too. This guide will walk you through the basics of investing in the stock market, even if you’ve never bought a share in your life.

At Greater Life Potential, we believe that financial empowerment is a key part of freedom and living your fullest life. Let’s start building that knowledge, one share at a time.

What Is a Stock?

When you buy a stock, you're buying a small piece of ownership in a company. If you own shares of a business like Disney, you're not just a fan, you’re a shareholder. Companies issue stock to raise money, and in return, you can benefit when the company grows.

There are two main types of stock:

1. Common stock gives you voting rights and potential dividends.

2. Preferred stock usually doesn’t have voting rights, but it often pays a fixed dividend and gets priority over common stock if the company dissolves.

How Do You Make Money with Stocks?

There are two main ways to earn money from stocks:

1. Capital Gains – Buy low, sell high. If you buy a stock at $50 and sell it at $75, you’ve made a $25 profit per share.

2. Dividends – Some companies share their profits by paying you regularly (usually quarterly). It’s like getting a bonus just for holding the stock.

What Should You Look for in a Stock?

Here are a few beginner-friendly indicators to consider:

• P/E Ratio (Price-to-Earnings): Tells you how much investors are paying for $1 of a company’s earnings. Lower isn't always better, but it can indicate a bargain.

• EPS (Earnings Per Share): How much profit the company makes per share. Higher is generally better.

• Revenue Growth: Is the company increasing its sales year over year (YoY)?

• Return on Equity (ROE): Measures how efficiently a company uses shareholder money to generate profits.

These are the kinds of financial metrics we use when analyzing companies. They're a great starting point when you're evaluating whether a stock might be a good investment.

Resource: You can find the above financial metrics for any publicly traded company here: Morning Star Just put the company's name in the search bar and it will show you all of the ratios and numbers you need to make those investment decisions.

What Are the Risks?

Investing always involves risk. Stock prices go up and down based on company performance, market trends, and global events.

Here’s how to manage risk smartly:

• Diversify: Don’t put all your money into one stock or industry. Spread it out across industries or invest in mutual funds or ETFs (exchange-traded funds).

• Think long term: Trying to time the market is a losing game. Historically, markets reward patience and long-term commitment. Buy the stock, then let it sit. We aren't trading crypto here. Over time, and I mean years, you will make money. Also, depending on the platforms you use, they may limit how soon you can sell/trade stocks.

• Understand your comfort level: If you lose sleep over a stock dropping $5, you might want a more conservative approach (e.g., dividend-paying blue-chip stocks). Also, consider the fees it may cost to trade or sell, especially if you think you may need a quick return.

How to Get Started

Getting started is easier than ever. Here’s a simple checklist:

1. Open a brokerage account
   Use platforms like Fidelity, Vanguard, or E*TRADE

2. Start small
   Begin with $50 or $100 in a well-known company, or consider index funds like the S&P 500 ETF (SPY) for instant diversification.

3. Set a goal and invest consistently
   Whether you’re saving for retirement, a home, or future freedom, having a goal helps you stay focused and avoid panic selling.

Final Thought: You Don’t Need to Be Rich to Invest

Investing isn’t just for Wall Street. It’s for you and for your future. With just a little knowledge and a long-term mindset, you can start building wealth today, even with small amounts.

At Greater Life Potential, we believe everyone deserves access to the tools that create security and freedom. Stock investing is one of those tools. So take your first step now; read, research, invest what you can, and let time and consistency do the rest.

You’ve got this.