When you buy a stock, you’re purchasing a small share of a company, which makes you a part-owner of that business. Stocks are traded on stock exchanges, and their value can fluctuate based on the company’s performance, market conditions, and investor sentiment. Holding stocks allows investors to potentially earn returns through price appreciation or dividends, but it also comes with the risk of losing value if the company performs poorly or market conditions change.
Investing Example
For example, if you buy 10 shares of Apple, you own a small portion of Apple. If Apple’s stock price increases due to strong earnings, the value of your shares goes up. Conversely, if Apple reports a decline in profits, your shares may decrease in value.