Stocks for Beginners

A stock represents a small piece of ownership in a company. When you buy a stock, you become a shareholder, which means you own a tiny fraction of that business.

How Do Stocks Make Money?

There are two main ways to make money from stocks:

• Price appreciation: The stock's value increases, and you sell it for more than you paid
• Dividends: Some companies share profits with shareholders through regular payments

The Risks

Stock prices can go down as well as up. Individual company stocks are riskier than diversified funds because if that one company struggles, your investment suffers. That's why many beginners start with funds rather than individual stocks.

Should You Buy Individual Stocks?

Buying individual stocks requires research and carries more risk. Many financial experts recommend that beginners focus on diversified funds (like index funds) instead of trying to pick winning stocks. Once you understand the basics and have a diversified foundation, you can consider adding individual stocks if you choose.

Getting Started

If you want to invest in stocks, start by learning about the companies you're considering. Understand what they do, how they make money, and their long-term prospects. Never invest more than you can afford to lose, especially in individual stocks.