Investing 101: How You Actually Make Money
1. When you invest, you’re buying a small piece of a company
Investing usually means buying shares. When you do, you’re putting your money into a business with the goal of seeing it grow.
You don’t help run the business, but you do legally own a small part of it. If the company becomes more valuable, your portion can become more valuable too.
You might invest in a single company, like Woolworths or Apple. Or you might invest through a fund that spreads your money across many companies, like an ETF.
You're not lending money or giving it away. You're buying into something with potential.
2. If the business becomes more valuable, your shares can be worth more
As a company earns more or grows in size and reputation, more people may want to invest in it. That demand can push the share price up.
If you bought a share for $10 and it later sells for $18, you’ve made $8 in what’s called capital growth. This is one of the most common ways people make money through investing.
Of course, share prices can go up or down, so returns are never guaranteed. But long-term investors tend to focus on steady growth over time rather than quick wins.
3. Some companies pay you just for holding their shares
This is called a dividend. It’s a portion of a company’s profits that gets shared with investors.
Not every company pays dividends, but some do it regularly, often every few months. It’s a way of rewarding people who have put money into the business.
You can choose to take the money as cash or reinvest it to buy more shares. Either way, dividends are a second way to earn from investing, even while you continue holding your shares.
4. Compound growth can make a big difference over time
If you’ve heard us talk about compound interest when it comes to saving, investing works in a similar way.
When your investments earn money, and you reinvest those earnings, that money starts earning more money too.
You’re not just growing your original investment. You’re growing everything it’s made along the way. This is called compound growth, and it can have a powerful effect over many years.
It doesn’t happen overnight, but it’s one of the main reasons people choose to stay invested for the long term.
5. You don’t need to get it perfect. You just need to get started.
Most people don’t make money by perfectly timing the market or picking the next big stock. They do it by investing consistently, giving their money time, and sticking to a plan.
You don’t need to know everything. You just need the right information and the confidence to take the first step.
Want to learn more?
This is exactly what we break down inside the Investing Masterclass. It’s designed to help you understand investing clearly, confidently, and at your own pace.
Enrolments open 2 June. We’d love to have you.
Not quite ready for the Masterclass?
That’s more than okay. If you’re just starting out, there’s no pressure to jump all in.
We’ve got loads of free resources to help you wrap your head around investing. Think downloadable guides, podcast episodes, blog posts and beginner-friendly explainers that actually make sense.
Start where you are. Take what you need. Come back when you're ready for more.
PS If you’re not already following @shesonthemoneyaus, you should be. We share investing tips, reminders and lots of helpful stuff to keep you going.
***Please remember our blogs aren’t intended as financial advice - they’re intended only as a starting point to give you a little extra info! For more in-depth advice catered to your personal financial position, please see a certified financial advisor.
