Many Canadians are investing in stocks through mutual funds, possibly chosen by their advisor. Even if you don’t invest directly in stocks, it’s still important to know what a stock really is.
Stocks represent individual shares in a company. When you buy a stock, you now own a fraction of that business. When the business achieves a profit, any earnings not retained by the company will be paid out to shareholders in the form of dividends.
You can also profit when selling the stock at a higher price than you originally paid; creating a capital gain.
This infographic created by Mint answers the question, what is a stock? Check back the next two Mondays for more investing infographics from Mint. (click image to enlarge)