I Was Like My Sister Who Vaguely Knows About Financial Freedom and Stock Market

I believe I spent an excellent 30-minute one on one casual talk with my young sister. She is in her second year in college taking a business course. Clearly I saw her amazement about the topic she doesn’t hear a lot about, not even in her studies or her peers or her course instructors. I knew she only hears it from me.

Our great topic is how to be financially free using stock market investing as the centerpiece. Like I was, she has no idea about stocks. She asked me what stocks are. I simply said stocks are a way to partially own big companies. I was obliged to explain further using a simple example. I used stones.

Supposing I own a company which has 100 pieces of stones representing its existence and value, that means my company equals 100 stones or stocks. If she wants to own a part of my company, all she needs to do is to buy several stones from me. Say she wants 3 stones. So I will be selling to her 3 stones to make her a 3-stone owner of my company while me, the major owner, still owns 97 stones or stocks.

Her next question was how to make profit?

Let us say that a stone has a value of P5.00. She bought from me 3 stones with a total value of P15.00. One day, after three months, the value of my stone increased to P10.00 each. If she decides to sell her 3 stones that day, that is when she will make a profit.

Another topic we talked about is the difference between being rich and being poor which I said there is no really difference as far as the ‘net’ pay is concerned. I explained to her that both rich and poor people have bills to pay. Rich people have big income yet big bills to pay. Poor people too live on that same proportion. But what matter really is who of the two has the ability to save after bills were paid? 

In the long run it is not how much one earns but how much one saves.

I encouraged her to just to finish her college course first. It is important for her, without other options currently, to have a work after college from where she can derive a constant income from which she can take a part of it in case she decides to finally invest in stocks. But I don’t like her to wait for that long. I will look for ways for her to start her stock investing much more early.

One thing I emphasized to her is that she is lucky there is someone, me, who introduced to her early about the fantastic idea of financial freedom and stock market investing.

If I am able to catapult her in financial interest into another level, that would give me another dose of inspiration for myself. That would be great!.