The stock market is a way for anyone to invest in public companies. It distributes ownership of some of the world’s largest companies among hundreds of millions of investors, and it helps determine the value of those companies by matching buyers and sellers at transparent prices.
Each share of a company’s stock represents partial ownership, and stocks are issued by companies to raise money to grow their business. Companies that sell their shares on the market are called publicly traded companies, and they’re listed on stock exchanges like the New York Stock Exchange and Nasdaq. The stock market is based on the law of supply and demand: If lots of people want to buy a particular company’s shares, the price will rise, which entices current shareholders to sell for a profit. But that’s not always the case, and prices can fall if too many investors are selling or if the company’s results disappoint.
A healthy, well-diversified portfolio can help you achieve your financial goals. While it may take time to learn how to invest wisely, technology has made it possible for almost anyone to manage their own investments. You can either do it yourself or work with a financial professional, but it’s important to remember that the stock market has risks you wouldn’t have with a bank account and that short-term returns differ from long-term averages.
The key is to have a long-term investment horizon (like retirement) and to keep a diversified portfolio to help offset risks.