A stock is the most fundamental building block of investing — a small, tradeable piece of ownership in a real company. Own a share, and a slice of that business is yours.
A stock (also called a share or equity) represents fractional ownership of a company. If a company has issued one million shares and you own one, you own one-millionth of the business — including a claim on its profits and assets. The terms “stock” and “share” are used almost interchangeably; technically “stock” is the general concept and a “share” is one unit of it.
Companies sell shares to raise money — to build factories, hire staff, fund research or pay down debt — without taking on a loan. In exchange, the new shareholders get a stake in the company's future. The first time a company sells shares to the public is its IPO (initial public offering).
Owning a stock can pay off two ways. First, capital gains: if you buy at $50 and the price rises to $70, the $20 difference is your gain when you sell. Second, dividends: many companies pay out part of their profits as regular cash to shareholders — explained in what are dividends.
Common stock is what most people buy: it carries voting rights and full exposure to the company's ups and downs. Preferred stock usually has no votes but gets paid dividends first and ranks ahead of common shares if the company is liquidated. A company's total market value of shares is its market cap.
Own shares risk-free: buy and sell fictional companies with $10,000 of play money in the stock market simulator and watch ownership turn into profit or loss.
Not advice: educational content only. For authoritative basics see the SEC at investor.gov.
Keep building: see what are dividends, what is an ETF, and the wider picture in the stock market for beginners.
A stock is a small piece of ownership in a company. Buying one share makes you a part-owner with a claim on the company's profits and assets.
They are nearly the same. 'Stock' is the general term for ownership in a company, while a 'share' is a single unit of that stock.
Two main ways: capital gains, when you sell a share for more than you paid, and dividends, which are cash payments some companies make to shareholders from their profits.
Common stock usually carries voting rights and full exposure to the company's performance. Preferred stock typically has no votes but receives dividends first and ranks ahead if the company is liquidated.