What are stocks?

Stocks represent a share of ownership in a company. Companies issue stocks as a way to increase their income and grow their business. Investors use stocks to grow their money and outpace inflation over time. These investors are also called shareholders as they share the company’s profits. Public companies are selling their stocks through a stock market exchange and investors are buying and selling these shares among themselves through stockbrokers. The stock exchanges track the supply and demand of each company’s stock which directly affects the stock’s price.

Stock prices fluctuate many times throughout the day. Investors buy those stocks with the hope that their value will increase over time. Not all stocks are profitable though. Companies may lose a great amount of money or go out of business completely. In this case, investors might lose all or a part of their investment which necessitates buying stocks across different companies and industries rather than focusing on just one.

How to make money in stocks?

Stocks is a riskier choice than other types of investments, but also enables you to generate very high profits. They enable you to earn money in two main ways:

1.When the price of a stock increases during the time you own it, you can sell it for more than you paid for it.

2.Through Dividends. These are regular payments to shareholders. Not all stocks involve that, but those who do typically do so on a quarterly basis.

The fastest way to buy individual stocks is through an online broker. The process of opening a brokerage account is similar to opening a bank account. The commissions charged by these brokers vary, so it is essential to do your research.