Stocks are a way to invest in individual companies by owning part of the company. Investing in stocks can potentially benefit you if your shares increase in price as the company performs well or if the shares of the company pay a regular dividend to provide you income. As a stockholder, you’ll have part ownership in that company, and may have the ability to vote and potentially influence certain company decisions, if you hold a significant number of shares.
How can stocks help your financial plan?
In the U.S., stocks have consistently earned a greater return than bonds over the long term, despite many ups and downs in the stock market. Investing in stocks can play an important role in saving for long-term goals like retirement because stocks can help your savings keep up with – or even outpace – inflation over the long haul. Of course, while there are risks investing in stocks, the more your investments (like stocks) grow, the closer you may come to reaching your financial goals.
Who are stocks for?
Stocks are for anyone looking to invest in a specific company or companies, anyone looking for growth or dividend income in his or her portfolio, and anyone with a higher risk tolerance for investing in assets that fluctuate in value and are not guaranteed.