Basics of Stocks – A Beginner’s Guide
What Are Stocks?
Stocks represent ownership in a company. When you buy a stock, you own a small portion of that company, known as a share. Companies issue stocks to raise capital, and investors buy them to earn profits through price appreciation and dividends.
Types of Stocks
✅ Common Stocks – Shareholders get voting rights and may receive dividends.
✅ Preferred Stocks – No voting rights, but priority in receiving dividends.
How Stock Prices Move
Stock prices fluctuate based on supply and demand, company performance, economic factors, and investor sentiment. Prices are influenced by earnings reports, industry trends, and macroeconomic events.
Why Invest in Stocks?
- Wealth Growth – Stocks can provide high returns over time.
- Dividend Income – Some companies pay dividends as passive income.
- Liquidity – Stocks can be bought and sold easily in the market.
Final Thoughts
Understanding the basics of stocks is the first step toward successful investing. Whether you're trading for short-term gains or investing for the long term, a solid foundation in stock market principles is essential.
