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Becoming The Shareholder Class


Everyone bashes corporations for generating record profits. Each year corporate profits are getting higher and higher, yet costs to live keep going up and up and wages are not going anywhere. So what gives? Why are corporations allowed to keep profiting on the backs of the little guy? What benefit does it provide the little guy if corporations are gobbling up all the money?

Lacking Knowledge

People trust that their homes will go up in value, but they don’t trust the banks that are collecting their interest on their mortgage to do well. It’s somewhat ironic that people think homes are the only way to riches when the banks are the ones making record profits year over year.

There still a lack of understanding and a great deal of ignorance when it comes to realizing just what it means to be a shareholder. A shareholder is someone who owns a piece of the company. Though it might be an electronic piece of paper, a share, no matter how small, represents your right to the profits from a corporation. It’s as simple as that. So long as consumers are willing to buy goods created from a corporation, the shareholders will continue to profit. Just remember that corporations will protect their owners before for their employees. That means being a shareholder is more important than an employee in the eyes of the corporation.

Your Pension

First off, before you start thinking that only the one percent can be shareholders, let’s just say that every Canadian that has ever worked or been issued a T4 slip is a shareholder. That’s because the CPP invests heavily in the stock market to generate returns that actually pay Canadians their retirement pension. What did you think they do? Grow money on trees to pay you? The CPP invests for you because they know you won’t do it for yourself.

The fact is, pension plans are some of the biggest holders of corporate stocks. That’s because they understand that businesses are there to protect their interests. Also they know that buying assets that are actually productive and generating cash flow leads to increased value over time.

So next time if you feel like the one percent are the only ones benefiting from rising stock prices just be glad that part of your retirement is being taken care of by someone by buying stocks on your behalf, because certainly you aren’t doing it for yourself.

How Can You Become A Shareholder Yourself?

So how do you become a shareholder? Quite simple. The first step is saving. As I’ve written before, saving is more important than picking the right corporation to own. Saving is what drives your nest egg to get bigger in the long run until the amount in your investments really starts working for you.

The first five years of savings is much more important than the last 5 years of savings when it comes to building an investment portfolio to become financially independent. That’s because money added earlier in life has much more time to work for you than money saved at the end. The power of compounding requires time for it to be effective and time is something that we cannot get more of.

Now many people will argue that saving is hard when you’re living in expensive cities. I counter with the fact that many people are living beyond their means. You aren’t doing yourself any favours if you own an iPhone X making minimum wage. And certainly having a $75 cellphone plan doesn’t help either. There are many ways that are possible to save more than you think. It’s just many of us can’t or won’t make those sacrifices.

The life choices we make can also affect our ability to save. Buying new cars, eating out at lunch everyday, buying avocado toast for breakfast. All that money adds up over time. And for those that say they can’t make it alone. Well then perhaps teaming up with someone would make your finances much easier. Remember back in the hunter and gathering days where we relied not just on our own but on others to help us get by? Whatever happened to the saying that “two is better than one”? Now it’s not to say you should go out and find yourself a sugar mamma right away, but consider that having someone help you out financially can make a big difference.


Take Action

You might be a great saver, but many of us do nothing with our savings. Rather than being a shareholder, we’d rather be the individual that corporations takes advantage of. Shareholders get a piece of the profits, savers who keep their money in the bank with GICs and high interest savings and spenders are essentially the source corporate profits.

Our inability to take action or procrastinate is what leaves us feeling jealous or envious of shareholders. It’s not the fact that we don’t have the funds saved or can’t invest. It’s the fact that we just don’t do it. Many people that I speak to have savings stashed away in GICs or high interest savings accounts. Many don’t realize the opportunities that they are losing by staying on the sidelines.

As time passes on, the wealth gap will increase wider and wider as those that stay invested int the long run will prosper and those who have not will look on with jealousy and contempt. Which side do you want to be on?

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