When you hear the term stock market, many things might come to mind. Perhaps you imagine a chaotic flurry of people in suits shouting “buy” and “sell” in a building on wall street. You might picture famous investors, like Warren Buffett, who made his billions through the stock market. Conversely, you might think of the market crashes preceding economic upheaval. Maybe you think of the recent headlines about the swings in the stock market and what that might mean for the U.S. economy.
The stock market evokes numerous thoughts, images and feelings. For many, one of the primary feelings is confusion. The stock market is undoubtedly complex, and with all the variables and unfamiliar terms, trying to understand how it all works can be daunting. To make an explanation easier and more enjoyable to digest, we created an overview of the stock market functions using pizza.
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Why It’s Worth Understanding the Stock Market
If you’re interested in investing, understanding the stock market is important. While this infographic only scratches the surface, hopefully it builds a solid foundation to understand what to dig into further. Even if you aren’t looking to go out and buy stocks, you might already have money in the stock market through your 401k. Your 401k is a key part of being able to live comfortably when you eventually retire. Understanding the stock market can help you make choices to grow that retirement fund.
It can be useful for kids to learn about investing too. Teaching kids about money will help send them on the path to being financially savvy adults. The stock market can be a great tool to teach kids about risk vs. reward and delayed gratification. Plus the earlier you invest, the more that investment can grow. One financially savvy young man used the money he had been saving to invest when he turned 18. By 25 he had $100,000.
Investing in the stock market is one way to help create financial security. Building your credit is another. Find out more about improving your credit score here.