What is a stock & how does it work?

A stock is a security that represents a fractional ownership in a company. When you buy a company's stock, you're purchasing a small piece of that company, called a share. Investors purchase stocks in companies they think will go up in value. If that happens, the company's stock increases in value as well. The stock can then be sold for a profit.

Are stocks a way to build wealth?

Simply put, stocks are a way to build wealth. This is how ordinary people invest in some of the most successful companies in the world. For companies, stocks are a way to raise money to fund growth, products and other initiatives. When you buy the stock of a company, you’re effectively buying an ownership share in that company.

What type of stock do people invest in?

Common stock. This is the type of stock most people invest in. Common shareholders have the right to receive any dividends that the company declares on its common shares, and they also have voting rights at annual and special shareholder meetings.

What is the stock market?

The stock market is where investors connect to buy and sell investments — most commonly, stocks, which are shares of ownership in a public company. Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page.