What Are Stocks?
Sooner or later every company needs several ways to raise money to fund production or services or in order to open a new office, factory or just hire more people. In that case, companies either borrow money or raise money by actually selling stocks to various investors. As soon as you own a share of a stock, you are basically owner of a part of the company and have a claim on every asset and every dollar the company earns from there on.
Stock buyers though do not think of stock buying as owning part of the company since they can rarely express an opinion on what’s done within the company. Despite that though, the stock still gets its value from the fact that it gives ownership rights to the stock owner. If the stockowners didn’t have any rights in what a company earns then the certificates for stocks would be nothing more than just a piece of paper. So it is only logical that, as a company’s income increases, more and more investors are interesting in paying for a stock.
Throughout time, stocks have become a quite solid investment for anyone. With the growth of economy over time and the amounts corporations earn, stock prices have also risen. It’s since 1926 that the average large stock has come back to a 10% a year. If you are for example saving money for your retirement days later, then buying a stock is a really good choice. It is of course possible that a company doesn’t do well over time and thus the company’s stocks will drop in value as well.
It’s basically a really good choice as a long-term money saving choice even though it’s also a risk at the same time. That’s why you should do your research well before buying stocks to make sure you are doing it when a company is doing well.