A stock is a small piece of ownership in a company. If a company is a pizza, one share is one slice. Own a slice and you own a tiny part of everything that company builds, earns and owes.
Why companies sell stock
Companies sell shares to raise money. That money can pay for new products, new buildings or new hires. In return, the people who buy shares become part owners and share in the ups and downs.
How you can make or lose money
There are two main ways. The price of a share can rise, so your slice is worth more. Some companies also pay dividends, which are small cash payments to owners. Prices can also fall, and you can lose some or all of what you put in. That is the risk side of owning stock.
Why prices move
Prices move when buyers and sellers disagree about what a company is worth. News, earnings, interest rates and plain mood can all push a price around in a single day. Over long stretches, prices tend to follow how well the business is doing, but no one can predict the path.
What to learn first
Start with the words. Our glossary explains terms like share, dividend and market cap in a few lines each. Then try the calculators to see how small amounts grow over time.
The big idea
Owning a stock means owning a business. Treat it that way. Learn what the company sells, how it makes money and what could go wrong before you ever put money in.
Learn more: Read our free beginner book, Investing from Zero.
A simple way to picture it
Imagine a neighborhood bakery owned by 1,000 equal shares. If you hold ten shares, you own one percent of the bakery. When the bakery earns more, each share may become more valuable. When it struggles, each share may be worth less. A public company works the same way, just on a larger scale and with shares that trade every day.
Stocks and the stock market
The stock market is simply the place where shares are bought and sold. Prices are set by buyers and sellers agreeing on a number. Nobody sets the price for you, and it changes constantly through the trading day.
What to learn first
Before putting in money, learn five words: share, price, market cap, dividend and risk. Then follow two or three companies for a few weeks without buying anything. Notice what moves the price and what does not.
Common questions
Is buying a stock the same as owning a company?
You own a small share of it, with a claim on its value but no say in daily decisions. The size of your stake depends on how many shares you hold.
Can I lose all my money in a stock?
Yes. A company can fail and its shares can lose most or all of their value. That is why people learn first and spread their money out.
Do I need a lot of money to start?
Many brokers allow small purchases, and some sell fractions of a share. Start with learning, not with a big amount.
Keep reading
- How to Trade Stocks and Options Without Getting Burned
- How to Build a Simple Stock Watchlist
- Space Stocks: A Free Game to Learn the Space Companies
Education only. This is not investment advice, and investing involves risk, including loss of money.
Ownership
Owning a share means owning a small piece of a company. You may share in its growth, and you also share in its risk.
Why companies sell shares
Companies sell shares to raise money for growth, new products or paying down debt.
How prices move
Prices rise and fall with buyers and sellers. News, results and mood all play a part.
Ways people may earn
Some stocks pay dividends. Some rise in price. Neither is guaranteed, and prices can fall below what you paid.
Before you start
Learn the words, practice with a watchlist, and never invest money you need soon. This is education only.