What is a Stock?
Stock, also known as shares or equities, represents ownership in a company. When you buy a stock, you become a partial owner of that company and are entitled to a share of its profits and assets.
How Stocks Work
Stocks are bought and sold on stock exchanges, such as the New York Stock Exchange (NYSE) or NASDAQ. Prices fluctuate based on supply and demand, market conditions, and company performance.
Types of Stocks
- Common Stock: Most widely held type, entitles shareholders to vote on corporate matters.
- Preferred Stock: Offers fixed dividend payments but usually no voting rights.
Why Invest in Stocks?
Stocks have the potential for high returns, making them a popular investment choice for long-term growth. Historically, stocks have outperformed other asset classes like bonds or savings accounts.
Case Study: Apple Inc.
Apple’s stock (AAPL) has been a favorite among investors for its innovative products and strong financial performance. In 2020, despite the pandemic, AAPL stock reached an all-time high, rewarding shareholders handsomely.
How to Buy Stocks
- Open a brokerage account
- Research companies
- Place buy orders
It’s essential to do your due diligence and understand the risks involved before investing in stocks.
