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What are stocks?

What are stocks? Put simply, stocks are piece of ownership of a company’s assets. Investors who purchase a company’s stock receive a small equity percentage of that company. This equity stake entitles investors to a few perks including distribution of excess profits, participation in investor meetings and voting on some key decisions for the company. While stocks are generally riskier than bonds, as they are not secured against any asset the company owns, they broadly perform better as long as the company continue to operate. Companies issue shares to investors as a way to finance growth, acquisitions or their day-to-day business. There are over 60,000 public companies around the world where investors can directly purchase shares of a company on a range of platforms from banks to online brokerage companies. Shareholders are last in-line to receive any assets should the company become insolvent. Due to this higher risk, investors need to pay close attention to all potential investments.

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