So here's a question that many of you need the answer to. What are stocks (and stuff like that)?

So I was asked by a friend if a stock was similar to a commission. Besides the fact that money is exchanged, it's completely different.

A commission is a form of paying an employee. Pretend I am salesman who works for a company, and my job is to sell bottles of lemonade for 5$.

It costs the company $2 to make the bottle, and then the company keeps 2$ for itself, and the remaining $1 is my payment. If I'm on commission, I get paid more if I sell more bottles of lemonade.

A stock is an investment into a company, making the investor an owner of a "share". Pretend I buy 1 share of stock in the lemonade company for $1, and the company agrees to pay me 1% of the profit they receive.

The amount of profit per water bottle is 2$ (as explained earlier) and basically, i would receive $0.02 for each bottle of water that is sold that year. What does the company do with the $1 i gave them up front? They invest it in their own company to make it grow, to sell more bottles of lemonade, which I get paid for. A stock owner is basically paid by how well the company is doing.

A "stock exchange" is where investors can go to buy stocks from lots of companies. There are also "bond exchanges"

A bond is basically a loan. If a lemonade company is selling bonds, they are borrowing money to be paid back to the investor at a certain period of time. Bonds are safer than stocks to invest in, generally.

Stock=you invest, and get paid until the end of time based on how well the company is doing.

Bond=you loan money to a company, and they pay you back after a certain period, plus a little bit of interest that goes in your pocket.

Next time, we're going to talk about the Federal Reserve (central banking), and why "those greedy people on wall street" are so hated.

I hope that helped answer your question, X!