Whether you’re investing for growth, stability, or a little bit of both, stocks can help you reach your financial goals. That said, it’s important to make sure that your stock investments align with your financial situation and risk tolerance. If you choose individual stocks, thoroughly research each company and evaluate their quarterly earnings reports on a regular basis. Or, consider low-cost mutual funds that track the market, such as index funds and ETFs.
A stock market is a place where entrepreneurs raise money by selling shares of their business to investors. The company gets the capital it needs to grow and expand without taking on debt, and investors profit from their investment as the value of the share rises over time.
The modern stock market began when companies invited ordinary people like you to hand over money in exchange for shares of their company. In the past, this was mostly done through “going public” — making shares of a private company available to a wider group of investors through a publicly traded stock exchange.
Today, the stock market is conducted largely on computers that work at lightning speed to match investors who want to buy shares of a particular company at a price someone else wants to sell them at. This is called the secondary market, while the primary market involves new issues, which are sold to investors through an initial public offering (IPO). Only public companies can be listed on a stock exchange, although private companies may have shareholders who can resell their shares.