This week’s newsletter is geared toward investing newcomers, though veterans might find a refresher useful too. The truth is, plenty of people, even those already investing, don’t fully understand the fundamentals.
Most of us never learned this stuff in high school. Financial literacy just isn’t part of the standard curriculum. So if you’ve ever felt confused about how stocks work or what it actually means to “buy shares,” you’re in good company. Today, we’re explaining the mechanics of buying and selling stocks from the ground up.
What Even Is a Stock?
Think of a stock as owning a tiny slice of a company. When you buy Apple stock, you literally own a piece of Apple, even if it's microscopic compared to what Tim Cook owns.
Companies sell these shares to raise money instead of taking out massive loans. That money helps them build new products, hire people, or expand. In return, you get to ride along with the company's success (or failures).
If the company does well? Your slice becomes more valuable. If it tanks? Well, your slice might be worth less than what you paid.
How Do You Actually Make Money?
There are two ways:
Price goes up (capital gains)
Buy at $50, sell at $80 = $30 profit per share. This is the main way most people make money investing.
Dividends (free money deposits)
Some companies literally pay you just for owning their stock. These payments (usually every few months) are called dividends. Think of it as getting a small paycheck for being a shareholder. But not all companies issue dividends, instead reinvesting into the business.
Where Do You Buy Stocks?
Stocks trade on exchanges, basically giant digital marketplaces. The two biggest in the U.S. are the NYSE and Nasdaq. When people say "the market crashed" or "the market hit a record high," they're talking about what's happening on these exchanges.
How to Actually Buy Your First Stock
It's honestly just as easy as ordering lunch from DoorDash:
1. Download a brokerage app
Apps like Fidelity, Robinhood, or Charles Schwab let you buy stocks from your phone. Most are free to use now (no fees for trades).
2. Connect your bank account
Transfer however much you want to invest, even $10 works to start.
3. Pick a stock
Search for a company you know. Maybe it's Nike, Netflix, or Chipotle. Do some quick research: How's the company doing? Is it growing? What do people say about it?
4. Hit buy
Choose between:
- Market order – Buy it right now at whatever the current price is
- Limit order – Only buy if it hits a specific price you set
That's it. You now own stock.
Selling Is Just as Easy
When you want to sell (maybe you need the money or think the stock peaked), you just:
- Open your app
- Select the stock
- Choose sell
- Confirm
If the price went up since you bought it, congrats, you made money. If it went down, you took a loss.
Why Do Prices Jump Around So Much?
Stock prices move based on what people think they're worth. Lots of things affect this:
- Company earnings (did they crush it or disappoint?)
- Economic vibes (recession fears, inflation, interest rates)
- Random news (CEO does something wild, new product drops)
- Hype and FOMO
For example, when a company announces record profits, everyone wants to buy, so the price shoots up. When bad news drops, everyone sells, and it tanks.
The Real Talk About Risk
Here's the thing nobody puts in the headlines: stocks can lose money. Like, a lot. Prices swing wildly, especially for individual companies. You could buy Tesla at $300 and watch it drop to $200 in a month.
That's why many first-time investors start with **index funds or ETFs** instead of individual stocks. These bundle hundreds of companies together, so you're not betting everything on one business. Less exciting, maybe, but way less risky.
The Bottom Line
Buying stocks isn't some mystical thing reserved for Wall Street. With an app and $20, you can start investing in companies you actually care about. The trick isn't timing the market perfectly or finding the next GameStop, it's starting early, staying consistent, and thinking long-term.
The stock market has historically been one of the best ways regular people build wealth. Not overnight, not with get-rich-quick schemes, but through patient, steady investing over years. Your future self will thank you for starting now instead of waiting until everything "makes sense."
