What is Stock?

stocks explainedYou have probably heard people say it a million times before, “you should get invested in the stock market”. It is easy to say, but how much more difficult is it to understand what a stock is and what it means? If you listen to the so called experts on television, you may think that it is quite complicated, but that is not the reality of the situation at the end of the day. You can learn how to invest in the stock market and what investments may be best for you.

What Is A Stock?

A stock is simply a little piece of ownership in a company. In the past it was on a piece of paper that was known as a stock certificate, but now it is something that one holds in their electronic accounts online. That being said, there are a lot who still do not understand what this exactly means.

Put simply, when one is purchasing a stock, they are purchasing their own little bit of ownership in the company. They get to enjoy in that company’s success and watch the value of their stock increase as a result. On the other hand, they have to bare the risk of losing value in the stock if the company does not do as well as expected. It is an investment that one hopes to use to improve the quality of their life and portfolio, but nothing is absolutely guaranteed at all times.

Why Is A Stock Worth Investing In?

To some investing in a stock sounds much like gambling. They may gain money on their investment, or they may lose money. However, it is different from gambling in a number of important ways. For one thing, when one invests in a stock they are actually gaining ownership of something. Stocks have value in and of themselves, they are not an all or nothing proposition like most bets are.

Another thing to remember is that the stock market is designed to go up. Companies are always working to improve their bottom line and thus the value of their stock as a result. That is different from a gamble in which the house is always favored to win in the long run. Different stocks carry different levels of risk with them, but all in all they are designed to increase in value.

How To Get Invested

Investors have a number of options available to them to get invested. Many may have the opportunity to take advantage of a 401(k) program through their employer. That is a great way to get started because many employers match at least some of the contributions. However, it is even more than that. There are opportunities to invest via low cost brokers online.

Alternatively, some may choose to use traditional brokers that they can visit in person and get advice from. These tend to be more expensive but do provide that one-on-one service that so many are looking for in a portfolio manager.

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