What are stocks?
In basic terms, stocks give you an opportunity to own a piece of a company. When you buy a company's stock, you essentially claim a share of the company's assets and earnings; you become a shareholder.
Why investors buy stocks.
They buy stocks in order to create wealth, achieve financial stability and independence, plan for retirement, vacation, or education. Stock investments offer the highest potential for building wealth in the long haul, compared to mutual funds, exchange-traded funds or index funds. But they are also riskier investments, compared to mutual funds or exchange-traded funds.
How to purchase stocks.
Benefits & risks of stocks.
Investors make money in two major ways. First, they earn money through capital gains. A capital gain is essentially the increase in price of a stock to a price higher than the initial purchase price. Second, investors make money through dividends. Dividends are basically free money you get for simply owning a stock or being a shareholder. Dividends are usually paid to shareholders quarterly. Not all companies pay dividends. Check out this nice comparison between stocks, ETFs and index funds.