Stock

A stock represents ownership in a company and constitutes a claim on part of the corporation's assets and earnings. When you buy stock in a company, you're essentially purchasing a small piece of that business, making you a shareholder. Companies issue stock to raise capital for various purposes, such as expanding operations, developing new products, or paying off debt. In exchange for your investment, you receive shares that represent your stake in the company. The more shares you own, the larger your ownership percentage. There are two main types of stock: common stock and preferred stock. Common stockholders have voting rights at shareholder meetings and may receive dividends, though these are not guaranteed. Preferred stockholders typically don't have voting rights but receive dividend payments before common stockholders and have priority in the event of liquidation. Stock prices fluctuate based on supply and demand in the market. When more investors want to buy a stock than sell it, the price rises. Conversely, when more want to sell than buy, the price falls. These price movements are influenced by various factors including company performance, industry trends, economic conditions, and investor sentiment. Investing in stocks offers the potential for capital appreciation (your shares increase in value) and dividend income. However, stocks also carry risk - companies can underperform, and stock prices can decline, potentially resulting in losses for investors. Understanding stocks is fundamental to building wealth through investing. Many people use stocks as part of a diversified investment portfolio to work toward long-term financial goals like retirement.