Stocks
Stocks represent ownership in a company.
What it means
Stocks represent ownership in a company. When you buy a stock, you own a small share of that business and can benefit if it grows in value or pays dividends. The value of a stock rises and falls depending on how investors think the company will perform in the future.
You buy shares in a company for £500. If the company's value grows, your investment may be worth more in the future. If it performs poorly, it could be worth less.
Why it matters
Understanding stocks is the foundation of investing because many investment products ultimately invest in them.
Stock prices move every day, but short-term price changes don't always reflect how well a business is performing.
Can I lose all my money investing in stocks?
Yes. A single company can fail, which is why many investors spread their money across lots of companies.