A stock represents partial ownership in a company. When you buy a stock, you become a shareholder, meaning you own a small piece of that business and share in its profits and risks.
How It Works
Companies issue stocks to raise money for growth, operations, or projects. Investors buy and sell these shares on stock exchanges, and prices fluctuate based on supply, demand, and company performance.
Types of Stocks
- Common stock: Gives shareholders voting rights and potential dividends.
- Preferred stock: Usually no voting rights but provides fixed dividends and priority over common stockholders.
Why People Invest
Stocks can provide long-term growth and income through dividends. However, they also come with risks, as prices can fall due to company performance, economic conditions, or market sentiment.
Final Thoughts
Stocks are a cornerstone of investing. They offer potential for wealth building but require careful research and diversification to manage risk effectively.