Stock definition

What are stocks?

Stocks (also called shares or equities) are pieces of ownership in a company. When you buy stocks, you become a shareholder – and that means you own a slice of that business.

Buying stocks: what to know

• Potential for growth: if the company does well, its share price can rise, and you could sell your stocks for more than you paid.
• Dividend income: some companies share their profits by paying regular dividends to shareholders.
• Risk and reward: stocks can be more volatile than other investments (like bonds), so prices can swing up or down based on company performance, news, or market sentiment.
• Share classes: there are different types of stock in certain companies. In a  nutshell, common stock usually gives you voting rights at shareholder meetings; preferred stock often pays fixed dividends but typically doesn’t include votes.

Buying stocks can be a great way to participate in a company’s success – but remember that diversifying your investment portfolio can help to manage the ups and downs.

Capital at risk. All investing should be long term. The value of your investments can go up and down, and you may get back less than you invest.