Turn on the TV news or open a newspaper, surf the internet or listen to the radio, and you will probably come across some information about the stock market: And, what are stocks that are bought and sold on this market? The answers to these questions are not always obvious once we begin to think about what stocks are.

For example, you may have heard that owning stock means that you become an owner of that company. But what does that mean? As an "owner" can you rightfully walk into one of its offices and take home a chair or a desk?

Can you hire and fire people? In this tutorial, we will answer these questions and more, often going into some depth to explain core concepts. Once a tool for the rich, the stock market has now turned into the vehicle of choice for growing wealth for many segments of the population.

Advances in trading technology and low-cost brokerage services on the internet have opened up stock markets so that today nearly anybody can own stocks with the click of a mouse.

Before proceeding, however, it is important to distinguish between two common uses of the stock market: Investing is when you hand over your money so that it is put to use for productive projects such as growth or expansion. Investing in a factory, in research and development, in a new business idea — these are all done with the expectation that in the future, the factory, the research, or the startup will be worth more than the original investment.

That means you have a reason to believe the factory needs to be expanded, or that you understand broadly the type of research being done and what the payoff might be, or that you understand and believe in the business plan of the new venture.

In personal stock market investing basics words, investing is a rational decision made with an eye to the future. When you invest, your money is intended to be put to work increasing value. Speculation, on the other hand, is akin to gambling.

Speculators purchase something with the hope that they can soon sell it at a higher price, but without necessarily understanding — or even caring — about why the price should go up.

Speculation should not always be viewed as a bad thing, definition of yield in stock market speculators add liquidity to markets, and many have done very well for themselves.

At the same time, many smart investors have lost their fortunes in the stock market through speculation. The important distinction between investors and speculators is not a normative one, but rather that investors are generally more interested in the processes underlying prices; they are in it for the long haul, while speculators are more personal stock market investing basics in the price itself, and with shorter time horizons for making money.

Dictionary Depression stock market chart Of The Day. A measure of what it costs an investment company to operate a mutual fund.

Latest Videos PeerStreet Offers New Way to Bet on Housing New to Buying Bitcoin? This Mistake Could Cost You Guides Stock Basics Economics Basics Options Basics Exam Prep Series 7 Exam CFA Level 1 Series 65 Exam.

Money Essentials - CNNMoney

Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education. Stock Basics Tutorial By Adam Hayes, CFA Updated May 25, — Different Types Of Stocks Stocks Basics: How Stocks Trade Stocks Basics: Trading Stocks and Order Types Stocks Basics: Valuing Stocks Stocks Basics: Speculators believe that the market overreacts to a host of variables.

These variables present an opportunity for capital growth. Start your own investing adventure with the help of some simple guidelines.

Getting Started In Stocks

Quit your job, be your own boss and earn a paycheck. Find out what to do to make it happen. Robo-advising is a good way to start investing and take advantage of compounding interest.

Speculators often get a bad rap, but it's important to remember that they only observe trends, not manipulate them. Understand which investment vehicles and strategies build you the most fiscally sound retirement.

Investment clubs have been around for several decades and are simply groups of people who get together to invest. Overdraft and credit cards will allow you to spend more money than you have, but whichever option you choose, be sure to Quitting your job does not trigger a taxable event for your k funds unless you elect to cash out your account and take Understand the relationship between a worker's earned income and benefits he or she receives from Social Security in retirement, Content Library Articles Terms Videos Guides Slideshows FAQs Calculators Chart Advisor Stock Analysis Stock Simulator FXtrader Exam Prep Quizzer Net Worth Calculator.

Work With Investopedia About Us Advertise With Us Write For Us Contact Us Careers. Get Free Newsletters Newsletters. All Rights Reserved Terms Of Use Privacy Policy.