What Are Stocks?

Stocks are shares of a company that are sold to help that company raise money. Owning a share of stock gives you certain rights within that company. You have a right to vote on company decisions, get a dividend each year and are considered a partial owner of the company.

Different Types Of Stock

Stock Certificate

Stock Certificate

Not all stocks are created equal. Different stocks give you different rights within the company. A share of common stock typically equals one vote at a shareholder meeting. However, different classes of stocks can give you more than one vote depending on how the company classifies your stock. Preferred stocks give you the ability to collect a dividend before other investors collect theirs.

Do All Companies Sell Stock

Some companies do not sell stocks at all. Most private companies sell equity in their company for an agreed upon price to specific people. Public companies usually sell stock to anyone who can meet the share price being asked for.

How To Buy Stock

How do you purchase a share of stock? Most stocks can be bought through a private brokerage firm. Stocks can also be purchased online through online trading sites. Stocks are typically traded on what is referred to as a stock exchange. There are exchanges in most big cities across the world.

Stocks Are A Good Investment

Purchasing a share of stock in a company can be a good way to invest your money. The value of your portfolio goes up as the value of your shares go up. Most investors get a 10 percent return on their investment each year. This means your money can double in value in as little as a decade.

Buying stock is a very good idea for long-term wealth building. Companies sell stock because it is a good way to raise funds quickly for their company. In return, you are guaranteed that the company will do everything it can to increase profits to yield a higher dividend.