What Are Stocks?
Stocks, or equities, are issued by companies and represent proportionate ownership interest in those companies. Owning a share of stock represents a small piece of ownership in that company. When you own stock in a company, you can potentially benefit from the dividends that are issued by the company, and/or the stock price of the company if it goes higher. Conversely, when the performance of the company goes down, you may receive lower dividends or the price of the stock may decrease. Why Invest in Stocks? Stocks usually have higher short-term risk than bonds. Historically, equity markets have tended to move both up and down in a more dramatic manner on a day-to-day basis than traditional fixed income instruments. However, equities have historically produced the highest returns relative to other investment classes.* An investment portfolio containing a mix of stocks, bonds and cash is one way to diversify your investments and plan for your future goals. Long-Term Investing Versus Mark
Buying stock in a company is, basically, buying a very small piece of that company. When a company wants to raise money, they issue stock… They sell little pieces of the company. You become a stockholder in that company and get the opportunity to go to yearly meetings and vote on who’s on the company’s board of directors and any big changes in the rule’s of how the company runs. Most people don’t actually go to these meetings since they are often in another part of the country (or in another country), but you can still send in your vote. Investing in stocks is not like putting your money in the bank… where it’s safe and where you get a pretty set (but low) interest rate. If the company does well, you do well. If the company stinks, you stink. In fact, you can lose all your money! If you put $10,000 in the bank, you won’t make much money in interest, but your $10,000 will always be there and it will be safe. If you invest $10,000 in a stock, you COULD make 70% return (increase) on y
