What are stocks and what do they represent?

A stock, also known as equity, is a security that represents the ownership of a fraction of the issuing corporation. Units of stock are called "shares" which entitles the owner to a proportion of the corporation's assets and profits equal to how much stock they own.

What are stocks and how do they work?

Stocks are an investment that allow you to own a portion of a public corporation. Stocks represent ownership in a publicly traded company. When you buy a company's stock, you become part-owner of that company. For example, if a company has 100,000 shares, and you buy 1,000 of them, you own 1% of the company.

How do stocks work and what are the benefits to owning them?

Owning a variety of different stocks can help investors enjoy gains in thriving sectors while offsetting losses in others. Both stocks and bonds play a complementary role in building a diversified investment portfolio. Buying both stocks and bonds helps investors capture market gains and protect against losses in a variety of market conditions.

What are the risks of investing in stocks?

The biggest risk of stock investments is the share value decreasing after you’ve purchased them. There are several reasons stock prices fluctuate (you can learn more about them in our stock starter guide), but in short, if a company’s performance doesn’t live up to investor expectations, its stock price could fall.