Investing in the stock market is one of the best ways to grow your money over time, but understanding how the market works can feel like learning a new language. Fortunately, technology has made it easier than ever to learn and start investing.
The stock market refers to the marketplaces or exchanges where stocks and other investments are bought and sold. Stocks are a type of security that represent fractional ownership of a public company and are a way for companies to raise capital and grow their business. The value of a company’s shares can go up or down for many reasons, from the economy to new management to a product recall. The value of a stock can also move up or down because of individual investor behavior.
Most investors buy or sell shares through a broker who has access to the stock market. The broker can place orders on the market to buy or sell shares of a specific company at a price that’s either bid by a potential buyer or asked for by a seller. When the bid and ask prices match, a sale takes place.
The stock market includes shares of individual companies, but it also has “indexes” that track the performance of groups of stocks. Several major indexes cover the world’s economies, while others are more focused on specific countries or regions. It’s also possible to buy or sell commodities (raw materials like oil, steel, wheat and coal) through the stock market.