Journey of a dollar : Where does my money go when I invest?
When you invest in a company by purchasing stock, you own a little part of that company. Here’s how it all works:
When you invest in a portfolio of stocks
When you choose to invest your money in a company, they use it to grow their business and fund new projects. Take the water technology company, Xylem, for example...
You’re investing in innovation
With the money Xylem has received from investors, they’ve created the Saajhi Pump – a pedal-powered water pump that helps farmers irrigate their crops and increase their yield by 3 times as much compared to rainfed crops.
The technology helps the people who need it most
The Saajhi Pump is a good product that works well, thanks to research and development. The demand for the pump is high because it reduces labor time by 25% or more and allows communities to reduce their water usage by 40%.
As profits increase so do potential returns
Xylem turns a profit and the value of their company increases; so, in turn, does the value of their stock. Because you own a piece of the company, you are entitled to a share of the profits.