What Are Stocks?
Stocks, also referred to as shares or equities, represent ownership in a company. There are two main types of stock: common and preferred. Owning stock in a company gives the shareholder a stake in the company’s success through potential dividends or the appreciation of the stock’s price.
Understanding Stocks
When you purchase stocks, you’re buying a piece of that company. This ownership gives you the right to participate in the company’s successes (or losses).
How Stocks Work: Companies issue stocks to raise capital, either for initial setup or expansion. Once issued, stocks are traded between buyers and sellers on stock exchanges, like the NYSE or NASDAQ (commonly referred as the stock market).
Valuation: The value of a stock is determined by various factors, including the company’s financial health, industry trends, market sentiment, and global economic factors.
Dividends: Some companies distribute a portion of their profits to stockholders through dividends. However, not all stocks provide dividends. Instead, some companies reinvest profits back into the business.
Why Invest in Stocks?
Stocks have historically offered higher returns over the long run compared to other assets such as bonds or bank savings accounts. When included in a portfolio, they offer diversification, helping to mitigate risks. Additionally, their easy sale on the stock market ensures liquidity for investors.
What is an ETF?
An ETF, or Exchange Traded Fund, is a type of investment fund that is traded on stock exchanges, much like individual stocks. An ETF holds multiple assets such as stocks, commodities, or bonds and generally aims to track the performance of a specific index.
Check Out Our Favorite Places To Buy Stocks!
Fidelity Investments
- Offers lots of different accounts including brokerage, IRAs, 401(k)s, Crypto, cash management, and credit cards
- Very trusted
- UI is not too great on mobile and desktop
- Customer support is amazing
- Can trade stocks, bonds, money market funds, crypto, options etc.
E* Trade
- Offers lot of different accounts including brokerage, IRA, and Savings & Checking accounts
- Very trusted
- UI is good on mobile and desktop
- Good customer support
- Can trade stocks, bonds, money market funds, options etc.
Webull
- Offers many different accounts including brokerage, IRAs, paper trading
- Trusted
- UI is amazing on both mobile and desktop app
- Ok customer service
- Can trade stocks, bonds, crypto, options, etc.
Robinhood
- Offers different accounts including brokerage & IRAs
- Not very trusted by consumers
- Best Mobile UI
- Bad customer service
- Can trade stocks, crypto, options
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