When you invest in stocks (also called equities), you are investing in a company.
“Investing in stocks” means buying shares of a company, even if it is a tiny piece.
You are expecting that the company will perform well and that, in consequence, the shares of the company you bought will appreciate in value.
It does not matter if you only own a tiny piece of the company shares. If the value of a company goes up, every shareholder will benefit.
Historically, stocks produced higher returns but also entailed higher risks.
If you invest in companies that are increasing in value, you could make a lot of money. The same way, if you invest in companies that are losing value, well, you could lose a lot of money.
Individual investors can buy shares directly or invest through an investment vehicle (a mutual fund, index fund, or ETF).
Many aspiring investors put too much weight into stocks. Stocks are a great source of portfolio growth. But if you are starting to invest, it is prudent to combine stocks with other less risky asset classes.
Our goal here is NOT to encourage anyone to invest in stocks. The idea is to show that it is an option. Because, if used well, it can help you achieve your investment goals.
Consult your financial advisor before making any investment or changes to your investment portfolio and/or strategy.
Read our disclaimer for more information.