By Lizeht Espejo
When I asked most of my friends what a stock was, they were unsure. At that moment, I was also unsure. To me, understanding how stocks work was complicated, and it still is. I won’t exactly explain how the stock market works, but I am going to give you some small details that make stocks a lot less confusing.
Everyone has a different understanding of “stocks” in their mind. Google defines stocks as the capital raised by a business or corporation through the issue of shares. They can also be referred to as shares, or equity. When bought, you own a percentage of the firm, and an ownership stake of its assets. To make it simpler, stocks represent ownership in a company or corporation.
The general idea of a stock is to invest in solid, well-managed companies that are capable of making profit. It is also important to remember that stocks are all about risk. Investing in the stock market can carry different types of risks, but if it is approached in an appropriate and disciplined manner, it becomes one of the most efficient ways to build up your net worth.
Now, into something that isn’t as simple: the types of stocks. After educating myself on the basic facts of stocks, I learned that there are two different types. They are known as common, and preferred. And to make life easier, they only have one major difference. A common stock carries voting rights, which allow the common shareholder to have a say in corporate meetings, while a preferred stock doesn’t. Stocks can also be classified, but I’m not going to get into that.
In conclusion, I have come to have a better understanding of what a stock is, which isn’t too hard to understand. Choosing the best stocks, and fully understanding how the stock market works will require more research from you, but hopefully you at least know what a stock is. This video helped me understand a lot more as well. >
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