Stocks represent ownership shares in a company. For freelancers, they can be a key tool for building wealth beyond active project income.
What is Stocks?
Stocks, also called shares or equity, are units of ownership in a publicly traded company. When you buy a stock, you own a small piece of that business. Their value fluctuates based on the company's performance and market conditions.
Why is this important?
For freelancers with variable income, investing in stocks can help build long-term financial security. It's a way to grow your savings, potentially earn passive income through dividends, and create wealth that isn't tied directly to your billable hours.
How does it work?
You buy stocks through an online brokerage account. You can research and select individual companies or invest in diversified funds like ETFs. Your goal is to buy at a lower price and sell later at a higher price, or hold for long-term growth.
Pros and cons
Key advantages include high growth potential and ownership in companies. The main drawbacks are market volatility, which means value can drop, and it requires research and a long-term perspective. It is not a get-rich-quick scheme.
Conclusion
Stocks are a fundamental component of investing. For freelancers, they offer a path to build assets separate from client work. Always start with research and consider your personal risk tolerance before investing.
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