How Stock Ownership Works

Q Can you explain how stock investing works? If I own 2 percent of a company’s stock and the company earns $100 million, do I get 2 percent of that — or $2 million? — C.H., Honolulu A If you own a company’s stock, you are indeed a part owner of it, though usually with a tiny stake. You won’t receive your share of its earnings directly, though. Instead, as the company grows more valuable, other investors will want to buy shares, raising the value of yours. Companies can directly send part of their earnings to shareholders, via dividends. And they can buy back shares, which boosts the value of remaining shares. They might also simply plow money into growing the business, which can encourage other investors and make the share price rise. Q Where can my teenagers learn about money and investing? — H.G., Kankakee, Illinois A They can learn a lot from you, if you share and discuss your financial experiences with them — and then help them start investing in stocks a little, perhaps via a custodial brokerage account. You might also have your teens read “The Motley Fool Investment Guide for Teens” by David and Tom Gardner with Selena Maranjian (Touchstone, $16). Younger kids can read “Growing Money” by Gail Karlitz and Debbie Honig (Price Stern Sloan, $10); “Go! Stock! Go!: A Stock Market Guide for Enterprising Children and Their Curious Parents*” by Bennett Zimmerman and Kathy Kamel (The Fourth Way World, $18); or “How to Turn $100 into $1,000,000: Earn! Save! Invest!” by James McKenna and Jeannine Glista with Matt Fontaine (Workman, $13). You should also tackle “The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money” by Ron Lieber (Harper Press, $16). Want more information about stocks? Send us an email to foolnews@fool.com.