On another fateful car ride to my son's elementary school, we were listening to Bloomberg Radio, and they started discussing the Forbes list of The Richest Americans. My son asked me, "How did Bill Gates get so rich?"
I told him that Gates had started a company in his garage that grew and grew until it was so large that they decided to "take it public," meaning that they allowed anyone to buy a "piece" of the company. When they did this, Gates still owned a large portion of the company, and everyone buying their small portions of the company caused his larger portion to increase in value. It increased so much, in fact, that he became the richest man in America (and remains at the top of the list with an estimated net worth of $80 billion).
"Oh, okay. Well who is the second richest person in America?"
"That's Warren Buffet."
"How did he get rich?"
Then we got to break down Buffett's journey to wealth. I told my son how Buffett made his fortune by buying up large portions of companies like the one Bill Gates started.
"Who is the third richest person in America?"
Finally, I just pulled up the Forbes list of the richest Americans on my iPhone, and I had my son read it to me.
I noticed while we looked over this list that many of the people in America who made this list had built their wealth by participating in the stock market. Most had either started companies, bought companies or were the children of people that had started a business that went public, like Wal-Mart or Campbell’s Soup.
When I told my son this, he asked, “Why don’t you put your company in the stock market?”
I smiled and said, “That’s called an IPO. You have to reach a certain size to be able to do that.”
Using Siri, I then pulled up the stock prices of some well-known Atlanta companies. I explained that these prices reflect the cost to buy one share of each business, Coke, Home Depot, Delta, etc. I explained that they’re called public shares because anyone can buy them and own a piece of that business.
The point in buying into these companies, becoming an investor, is a way to participate in the company's future growth. So if you can accumulate enough shares in the right companies or the market in general, and hold those shares for long enough, someday the value can be powerful enough to allow you to "retire early" or maybe even hit the Forbes 400 list.
“You know you don’t have to take a company public or own thousands of shares in a company to make money in the stock market, though,” I said. “You can start with a small amount of money, and that’s what my company Wela tries to people do every day.”
This conversation stuck with me for the rest of the day as I thought about how much of an impact the stock market has had in many people’s lives. I love the fact that the same system that made Bill Gates and Warren Buffett billions of dollars can also help anyone in the world grow their net worth.
With so many options now in the financial industry, it's easier than ever for people to take advantage of this system. If you're looking to get started, I would suggest looking at some of my past articles here, and even visiting my company's website www.yourwela.com if you're looking to get started investing.
God bless kids for asking important questions.
Certified financial planner Wes Moss offers financial and accessible investment advice to Atlanta Bargain Hunter readers.
