The stock market is a place where stock buyers and stock sellers come together to create transactions. Anyone can participate in the stock market by opening up a brokerage account and placing orders.
The broker will match your trade with another opposite trade. So if you buy a stock they will have to find a seller to sell it to you and vice versa. Luckily because there is just so much liquidity in the market it normally doesn’t take more than a few seconds to do this online.
So, now you understand a little bit about what the stock market is and you know that the main reason to have it is to easily match buyers and sellers, but what is a stock?
A stock is basically a small percentage of the company. If a company consists of 50 million shares and you buy 1 share you effectively own 1/50 millionth of the company.
Obviously with such a small amount of the ownership you don’t have much voting power in the company and you can’t play a major part in what happens with the company. But there is another benefit to buying stocks.
Just owning stock is a terrific way of building your wealth. A share represents a portion of the company, so each stock is backed by the company and should be around as long as the underlying company is around. Also as the company grows your stock should also theoretically grow with it.
By getting into stock in strong companies that are likely to be around for a while and are likely to grow you are putting your money into something that is considered to be safe and will likely increase and build your wealth as time goes by.
Owning stocks has actually become one of the most powerful ways of growing your wealth and is definitely something worth looking into if you have money lying around and want to put it into good use.
If you are learning about the stock market and still have questions please ask them on this stock market questions and answers page.. Also published at What is the Stock Market and Should You Be a Part of it?.
Tags: finance, invest, investing, investment, investments, personal finance, stock market, stocks, wealth building