What Is a Stock (Share)

A stock, also called a share, represents partial ownership in a company. When you buy a share you own a small slice of that business and hold a claim on its future earnings and assets. Companies issue stock to raise money, and investors buy it hoping the business grows more valuable over time.

Investors buy stocks to participate in a company long-term growth and sometimes to collect dividends. Over many decades a diversified basket of quality stocks has historically returned roughly 7 to 10 percent per year on average. Focus on understanding the underlying business rather than chasing short-term price swings, and only invest money you will not need soon.

If a company has 1 million shares outstanding and you own 1,000 of them, you own 0.1 percent of the business. If the whole company is valued at 100 million dollars, your stake is worth about 100,000 dollars, rising or falling with the company value.