decide that’s a pretty good return on your investment, so you sell your shares on the stock mar-
ket. The person who buys your shares imagines that company XYZ is going to continue to do well. Meanwhile, you just made a profit of $25! It may be that the new owner also makes a profit if the
stock continues to grow. And then you might feel disappointed that you sold so quickly. BUT, at any moment, company XYZ could experience a huge production problem or scandal that causes the stock to drop sharply. Now that stock is down to $1. A lot of money could be lost this way.
Trying to predict when companies will be doing well and when they will do poorly is the game called “playing the stock market.” And it’s not easy! You want to make predictions on when you think companies will be on the rise
Personal Finance Stories Matt signed up for an online stock investing fund through his mobile device. He has a little bit of money tucked away in a savings account and decided to play the stock market to see if he could make a bit more money faster. The app doesn’t charge any fees, so he can trade as much as he wants to. He got a tip about this hot new stock where he could potentially triple his money. It’s risky, but he decided to invest $500 in the stock and see how it goes. The first week the stock skyrocketed and he made about $50, so he let it ride hoping to triple his money. The second week, the stock was still doing well and he made another $50, so he continued to let it ride. Over the next few weeks, he continued to watch the stock go up, until one day, there was some bad news about the company and the stock tanked 50%. Ouch. His $500 investment had gone up over $600, but with this news, was now worth about $300. Worried, he sold all of the stock and swallowed hard over his $200 loss. The stock market is full of risks, along with normal ups and downs. Think about longer-term stocks and companies that you trust and even use their products. Most of all, understand that you could lose all of your money at any time.
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