Basics of the stock market

📈 What Is the Stock Market?

The stock market is where investors buy and sell shares (stocks) of companies. It’s a place where companies raise money and investors try to grow their money.

🏢 What Are Stocks?

• Stocks represent ownership in a company.
  
  

• If you buy a stock, you own a small part of that company.
  
  

• For example, owning Apple stock makes you a part-owner of Apple.
  
  

💵 Why Do People Invest in Stocks?

1. To grow money over time (capital appreciation).
   
   

2. To earn dividends (a portion of the company’s profit paid to shareholders).
   
   

3. To build wealth for goals like retirement, a house, or education.
   
   

💹 How Do You Make Money?

1. Price increases – Buy low, sell high.
   
   

2. Dividends – Regular income from the company’s profits.
   
   

🔄 How Does It Work?

• You buy and sell stocks through stock exchanges (e.g., NYSE, NASDAQ).
  
  

• You need a broker or a trading app (like Robinhood, Fidelity, etc.).
  
  

• Prices of stocks go up and down based on supply & demand, news, company performance, economy, etc.
  
  

🧠 Key Terms to Know:

Term & Meaning

Stock Exchange

Marketplace for buying/selling stocks (like NYSE or NASDAQ)

Broker

A platform that lets you trade stocks

Bull Market

Market going up

Bear Market

Market going down

Portfolio

Collection of your investments

IPO

Initial Public Offering – when a company sells shares to the public for the first time

⚠️ Risks & Rewards

• Stock prices fluctuate – you can gain or lose money.
  
  

• Higher risk than savings accounts, but higher potential return.
  
  

• Long-term investing usually reduces risk.