What is a Stock?

• Simply put, it’s a financial instrument that represents ownership in a company. 

• When you buy a stock, you are purchasing a small piece of that company. By doing so, you become a shareholder and are entitled to certain rights and benefits within the company. 

• The price of a stock is a reflection of its supply and demand, which depend on many variables like economic conditions, company performance, industry trends, and more. 

What is the stock market?

• It is a marketplace where stocks are traded between investors in an orderly, regulated manner. 

• By bringing together a large number of buyers and sellers, stock exchanges ensure that there is a constant flow of trades. This is significant because it ensures that stocks can be bought or sold without prices being significantly impacted. 

• For example, you may have heard of the New York Stock Exchange (NYSE) or Nasdaq. 

Brokerages

• A brokerage facilitates the buying and selling of stocks - it acts as a middle man. 

• For example, let’s say you want to buy a share of Company X. You would choose online brokerage, like TD Ameritrade, create an account, search for company x, and use its user interface to navigate thereon.

• There are a number of brokerages. Why should you choose one over the other? Here is a concise, simplified summary of a few reputable ones:

  • Robinhood: Known for commission-free trades and friendly user interface. Popular among young, tech savvy investors interested in stock trading without traditional fees. 

  • Vanguard: Suitable for long term investors, as it heavily emphasizes low-cost index funds and ETFs for long term, passive investors. Recommended for people seeking to practice a buy-and-hold strategy. 

  • TD Ameritrade: Suitable for investors looking for diverse investment options and support for active trading and research. 

• For beginners, it’s generally recommended to use robinhood. However, depending on your specific needs, be sure to find the right fit.