Cashtoons

Money Tree

January 08, 2021

money tree

Remember Boomer the ice cream entrepreneur?

ice cream stand

When you bought a small part of Boomer’s business, you were investing. If his business grows so does your piece of it. If the ice cream stand loses money and shrinks, your piece shrinks too. If it stays the same, you didn’t lose money, but you haven’t gained money either.

Buying shares of a company is like planting a seed.

seed

You hold on to those shares and hope the business grows.

small plant

Maybe, Boomer moves from an ice cream stand to an ice cream shop. The business is growing and so is your part of it!

growing

The bigger the business, the more your stock is worth.

tomato

Something to keep in mind: you only get money for the growth that happens after you buy the stock. If you buy stock when the business is still small, like a seed, then the whole plant is profit for you.

money tree

If you buy stock in a big business that is already successful, you make money with any new growth. The key is to give it time. Like growing a plant from a seed, the most reliable ways to invest take time.

Come back next week, to find out how to tell if you made a good investment.

Sources

sources

Warren Buffett’s Ground Rules: Words of Wisdom from the Partnership Letters of the World’s Greatest Investor


© 2022