Stock, also known as equity or shares, represents ownership in a corporation.
When you buy stock, you become a shareholder and own a portion of the company.
This entitles you to a share of the company's profits and assets, as well as a vote in certain company decisions.
[In this guide, you'll learn:]
Different types of stock
How stocks are traded
The risks and rewards of investing in stocks
There are two main types of stock:
Common Stock: This is the most common type of stock. Common stockholders have voting rights and may receive dividends, but they are last in line to receive assets if the company goes bankrupt.
Preferred Stock: Preferred stockholders do not have voting rights, but they receive a fixed dividend and have priority over common stockholders in receiving assets if the company goes bankrupt.
Stocks are traded on stock exchanges, such as the New York Stock Exchange (NYSE) or the NASDAQ. Investors can buy and sell stocks through a broker. The price of a stock is determined by supply and demand.
Investing in stocks can be a rewarding way to grow your wealth, but it also comes with risks. The value of stocks can fluctuate, and you could lose money if you sell your shares for less than you paid for them. However, over the long term, stocks have historically outperformed other types of investments.
Stocks represent ownership in a corporation.
There are two main types of stock: common stock and preferred stock.
Stocks are traded on stock exchanges.
Investing in stocks can be a rewarding way to grow your wealth, but it also comes with risks.
For more insight into how stocks interact with other financial instruments, see our detailed guide on bonds, which further explores the differences between stocks and bonds and how they can be used to create a diversified investment portfolio.
Common stock gives shareholders voting rights and potential dividends but lower priority in company assets if it goes bankrupt. Preferred stock offers no voting rights but guarantees a fixed dividend and higher asset claim in bankruptcy.
Stocks are bought and sold on stock exchanges through a brokerage account. The price of a stock fluctuates based on supply and demand.
Stocks can be a good long-term investment, but they come with risks. It's important to research and diversify your portfolio to manage these risks.