GLOSSARY TERM
Stock
A stock is a small ownership share in a company.
What does this mean in practice?
When you buy a stock, you become a part-owner of that business. If the company grows and becomes more valuable, the value of your stock may rise. Some companies also pay dividends, which means part of the profits may be paid to shareholders. But stocks also involve risk, and their prices can rise and fall, sometimes sharply.
Example
If you buy shares of a company, you own a small part of it. If the business does well over time, the stock price may go up and your investment may grow. If the company struggles, the value of the stock may fall.
Why it matters
Stocks are one of the main ways investors build long-term wealth. They usually offer higher long-term growth potential than cash or bonds, but they also come with more short-term volatility.
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