Stocks are a type of security that gives stockholders a share of ownership in a company. They also are called “equities.”

Investors buy stocks for various reasons, including:

Capital appreciation, which occurs when a stock rises in price

Dividend payments, which come when the company distributes some of its earnings to stockholders

Ability to vote shares and influence the company

Companies issue stock to get money for various things, which may include:

Paying off debt

Launching new products

Expanding into new markets or regions

Enlarging facilities or building new ones

There are two main kinds of stocks, common stock and preferred stock. Common stock entitles owners to vote at shareholder meetings and receive dividends. Preferred stockholders usually don’t have voting rights but they receive dividend payments before common stockholders do, and have priority over common stockholders if the company goes bankrupt and its assets are liquidated.

Generally, stocks are traded in blocks or multiples of 100 shares, which are called round lots. An amount of stock consisting of fewer than 100 shares is said to be an odd lot.

Stocks traded on an exchange must meet the exchange’s listing standards, including requirements on the company’s assets, number of shares publicly held, and number of stockholders. Many securities are not traded on an exchange because the issuing companies are too small to meet exchange requirements. Instead, they are traded Over-the-Counter or OTC by broker-dealers negotiating directly with each other via computer and phone.

Investing is putting money to work for a period of time in some sort of project or undertaking to generate positive returns (i.e., profits that exceed the amount of the initial investment).

Today, investment is mostly associated with financial instruments that allow individuals or businesses to raise and deploy capital to firms. These firms then rake that capital and use it for growth or profit-generating activities. Some of the most common types of investments include:

– Stocks

– Bonds

– Funds

– Investment Trusts

– Alternative Investments

– Options and Other Derivatives

– Commodities

Active investing involves a professional money manager who actively selects investments to beat the market. Passive investing, on the other hand, advocates a passive approach, such as buying an index fund, in tacit recognition of the fact that it is difficult to beat the market consistently.

Investing is not reserved for the wealthy. You can invest nominal amounts. For example, you can purchase low-priced stocks, deposit small amounts into an interest-bearing savings account, or save until you accumulate a target investment amount.

You can choose the do-it-yourself route, selecting investments based on your investing style, or enlist the help of an investment professional, such as an advisor or broker. Before investing, it’s important to determine your preferences and risk tolerance. If you’re risk-averse, choosing stocks and options may not be the best choice.

Investing and gambling are similar in one aspect: the variability of chance. However, these activities differ in how they are designed, approached, and regulated. Gambling is confined to what can happen within a given event. In some cases, the game’s rules are dictated by a person or entity that offers the game, and the rules can be constructed to benefit them over time. Investing differs from gambling because the regulators—government and industry entities—only regulate the markets. As such, their incentive is to create a fair and orderly playing field rather than to try and profit.

Investing in stocks allows you to own a portion of companies, potentially earning returns through dividends and capital appreciation, helping you achieve long-term financial goals

Benefits include:

– Potential for long-term growth

– Liquidity

– Diversification

– Ownership in companies

– Dividend income

– Inflation protection

Stocks can help you:

– Build wealth over time

– Save for retirement

– Fund education expenses

– Achieve financial independence

– Grow your emergency fund

Yes, investing in stocks carries risk, but:

– Historical data shows stocks outperform other investments long-term

– Diversification can reduce risk

– Regular investing can help smooth market fluctuations

Start as soon as possible, even with a small amount, to:

– Take advantage of compound interest

– Ride out market fluctuations

– Build a long-term investment habit

It depends on your:

– Financial goals

– Risk tolerance

– Current financial situation

– Diversification strategy

You can invest in stocks yourself through online brokerages or robo-advisors, but our financial advisors can provide personalized guidance and expertise.