Personal investment in stocks, where does the income come from?

Today I will give a basic understanding of investing in stocks, suitable for noobs who have never done stock investment, non-novices can quit!

People around you must be speculating in stocks, and you will hear them say what stocks they speculate in to make money. Then, do you know where the income from personal investment in stocks comes from? What kind of money does stock trading make?

Today I am here to explain to you where the money earned from stocks comes from.

First of all, the first money you earn from stock trading comes from the company's dividends.

For example, if you and Zhang San, Li Si, and Wang Wu jointly opened a restaurant, and each of them contributed 250,000 yuan, a total of 1 million yuan, then you own 25% of the ownership. Assuming that 1 unit of shares is worth 1 yuan, then you own 250,000 shares of the company.

If the net profit of the restaurant next year is 400,000 yuan, in addition to taking 100,000 yuan to continue operating and using the remaining 300,000 yuan for dividends, then you can get 300,000*25%, which is 75,000 yuan in income, right?

This kind of distributable profit distributed by listed companies to shareholders according to the shareholding ratio is the so-called dividend. In fact, there are dividends. Let’s not talk about the complexity here.

Then the second money you make from stock trading is also the main source of your money from stock trading, which comes from the premium of stocks.

Still the example mentioned above, suppose you are going to buy a house at this time, and you are ready to get back the money you invested in the restaurant. You are considering transferring the shares to another person. Will you transfer them at 1 yuan per share?

Certainly not, right, because this restaurant has a high rate of return every year and is a good investment project, so someone must be willing to take over your shares at a higher price. Assuming that in the end you changed hands at 2 yuan per share, then it is 500,000 yuan, and your income after deducting the principal is 250,000 yuan, right?

That's the premium on the stock. As for why the stock has a premium and how it is affected, we will talk about it in the next issue.

Finally, two more concepts should be added here, that is, we often hear the primary market and the secondary market, but in fact both the primary market and the secondary market belong to the stock market.

The primary market is the market formed when a company first issues shares and sells them to initial investors.

And as we said later, the stocks in your hand can be transferred to other investors, right? The market where investors transfer stocks to each other is called the secondary market.

In the words of the Internet, the primary market is B to C, and the secondary market is C to C.

Well, that's all, very basic, very noob.