Stock.

In plain English

When you buy a share of stock, you become a tiny part-owner of that company. If the company does well, your share is worth more and may pay you a portion of the profits (a dividend). If the company does badly, your share is worth less. Public stocks trade on exchanges like the NYSE and Nasdaq, and prices change every second the market is open.

01Why it matters

Owning stocks (usually through a fund, not one at a time) is how most people grow wealth over decades. Historically, a broad basket of U.S. stocks has outgrown cash and bonds over long horizons, with an average annual return comfortably ahead of inflation, though any single decade can look very different. The trade-off is short-term volatility you have to ride out.

02The math, step by step

If you put $100 into a single share of a stock at $100, and a year later it trades at $108 with a $2 dividend paid, you've earned $10, about a 10% total return. Over a single year, returns can easily range from -30% to +40% on a single stock. That's why most beginners are pointed toward index funds, which spread the same money across hundreds of stocks at once.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT