What’s a stock?

AngieHave you heard people talk about the stock market? People get real excited about it because stocks are a way to own pieces of big companies. When you invest, you become a shareholder. Think of a company you know and imagine owning some of their stock. Now imagine earning some of the money they earn!

Now let’s talk about the language of the stock market. Let’s look at the HIJK Company. The stock is referred to using its symbol, which is usually an abbreviation of the company name. A single stock in company HIJK is called a share, and people usually buy whole shares. A share is a piece of a company, and its value, or share price, rises and falls based on how much people will pay for a share. People will pay money for the stock if they think the company will be successful. If it is, its stock will increase in value.

The HIJK Company, a shareholder, a stock certificate and 3 stacks of money

And sometimes the company will also pay its investors a dividend. That’s when the company pays the shareholders a part of its profits. The idea behind investing is to pick companies that you think are going to grow and increase in value. The trick is to buy shares when the price is low, so you can sell them when the price is high. That’s how you make money on your money!

Click the Next button to continue.