Mint Money Knowledge Center: What are stocks?

What are stocksBefore you invest any of your money into a stock exchange, it is imperative that you know the basics. For example, how can you start buying and selling stocks if you do not have a comprehensive understanding as to what a stock is? Take the time to get familiar with the basic terminology associated with securities investing and you will be able to do a better job at determining how to invest your money wisely.
 

What is a Stock?

According to Investopedia.com, a stock is a security that represents a portion of ownership in the issuing company. There are many different types of stocks that serve a variety of functions, but you take on a small portion of actual ownership in that company when you purchase a stock the company has issued. Stocks must be issued by the company to be valid and there may be rules limiting how much stock you can buy in one company.
 

Why Do Companies Utilize Stocks?

According to Investor.gov, the main reason that companies utilize stocks is to raise money. In some instances, it could be money needed for a specific project such as launching a new product or expanding their manufacturing facility. In other instances, companies rely on the ongoing income from investors buying stocks to cover operating costs and reduce overall debt.

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