Investing term

What is Stock?

A unit of ownership in a company, also called a share. Entitles the holder to a proportional slice of profits and assets.

A stock (or share) is a unit of ownership in a company, entitling you to a proportional slice of its profits and assets. Buy one share of a company that has issued a million, and you own a millionth of the business — its dividends, its growth, and its risks, all in proportion.

Owning stock makes you a part-owner of a real business: you benefit when it grows and prospers, and bear the loss when it struggles or fails. Over long horizons, stocks have been the most powerful engine of wealth of any mainstream asset class — but that reward is paid for with the bumpiest ride, including deep drawdowns that test every investor's nerve along the way.

A slice of a real business
1 share= a slice of it allYour share3%Rest of the company97%A share is real ownership — a proportional claim on the company's profits and assets.

A share is a unit of ownership: one share of a company with a million shares is a millionth of it — its profits, its growth, its risks. The strongest long-run wealth engine, and the bumpiest ride.

For example

Buy one share of a company with a million shares and you own a millionth of it — its dividends, its growth, and its risks, all in proportion.

Learn it by doing

That's Stock in theory — it clicks when you use it. Practise it hands-on in a free, interactive lesson (Stage 4, Stocks, Bonds, Cash & Alternatives).

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Why it matters to you

Stocks matter because they're the primary way ordinary people share in the growth of the economy and build long-term wealth. As part-ownership of profit-making businesses, they carry the highest long-run expected return of the main asset classes — and the highest volatility. Understanding that a stock is a real ownership stake, not a lottery ticket, is what turns short-term price swings from a source of panic into the price of admission for that long-run growth.

⚠ Treating a single stock like a safe bet

One share is one company's fortunes — and any single company can stagnate, be disrupted, or go bankrupt, taking your investment with it. Concentrating in one or a few stocks exposes you to risks the market doesn't reward you for. The long-run strength of stocks as a class is best captured through broad diversification, not a handful of favourites.

Frequently asked questions

What is a stock?

A stock, or share, is a unit of ownership in a company. Owning it makes you a part-owner entitled to a proportional slice of the company's profits and assets. You gain when the business grows and lose when it struggles — its performance is your performance, in proportion to your holding.

How do you make money from stocks?

Two ways: capital gains, when the share price rises above what you paid, and dividends, a share of the company's profits paid out in cash. Over the long run, reinvesting dividends and holding through growth has made stocks the strongest wealth-building asset class, despite big swings.

Are stocks risky?

Individually, yes — a single stock can fall sharply or become worthless if the company fails. As a class, stocks are volatile but have delivered the highest long-run returns of the main asset types. Broad diversification and a long time horizon are what turn that volatility into a manageable risk.

Read the full guide

Investing basicsStocks vs Bonds: The Growth Engine and the SeatbeltTwo things sit underneath almost every portfolio: stocks and bonds. Here's what each one really is, in plain English — and why sensible investors hold both.6 min read

Related terms

AlternativesInvestments outside the core stocks/bonds/cash mix — REITs, commodities, gold, crypto.BondA loan from you to an issuer (government or company), repaid with interest on a known schedule.Capital gainThe profit from selling an investment for more than you paid.CommodityA raw physical good like gold, oil, wheat, or copper — priced by the ounce, barrel, or bushel.
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