How Stocks Work for Beginners

How do stocks work? That seems like a question that one should know before investing. However, with the billions of dollars invested in employer retirement plans, many people don’t have the answer to that question. 

Here's an expert-level overview of the ins and outs of how stocks work and why they matter to investors 

A stock represents a means for companies to raise capital outside of a regular revenue stream. When companies sell shares of stock, they sell a small piece of ownership for interested investors to buy.

What Are Stocks?

Shares of stock are priced based on supply and demand. Companies have a finite number of shares, and any investor wanting to buy stock has to decide if the price justifies a purchase.

What Determines Stock Prices?

You can make money with stocks by selling when the stock is worth more than you paid or with dividends

How Do You Make Money From Stocks?

You can invest by either buying a certain stock directly, or investing in a mutual fund that owns a multitude of stocks

How to Invest in Stocks