Great — let’s start with the fundamental investing concepts 👇
🧩 1. What is a Stock
Broker?
A stock broker is a company or individual that
helps you buy and sell stocks (or other securities) in the stock market.
- Think
of a broker as a bridge between you (the investor) and the stock
exchange (like NASDAQ or NYSE).
- You can’t
directly buy shares from the exchange yourself — you must go through a
licensed broker.
Examples:
- Online
brokers: Charles Schwab, Fidelity, Interactive Brokers,
Robinhood, eToro, etc.
- Traditional
brokers: Merrill Lynch, Morgan Stanley (with human advisors).
How they earn money:
- Commissions
or spreads on trades.
- Account
fees (in some cases).
- Interest
on uninvested cash.
💡 2. What is a Stock?
A stock (or share) represents ownership
in a company.
- When
you buy a stock, you own a small part of that company.
- If
the company grows and earns profits, your stock value can increase
and you may receive dividends.
💰 3. What is the Stock
Market?
The stock market is where people buy and sell
ownership shares of companies.
- It’s
like a marketplace for investors.
- Examples:
New York Stock Exchange (NYSE), NASDAQ, Tokyo Stock
Exchange.
🏦 4. What is an
Investment Account?
It’s the account you open with a broker to
hold and manage your investments.
Common types:
- Cash
account: You buy stocks with your own money.
- Margin
account: You can borrow money from the broker to buy more
(higher risk).
- Retirement
account (IRA, Roth IRA): Used for long-term investing with tax
benefits.
📈 5. What is an ETF
(Exchange-Traded Fund)?
An ETF is a basket of many stocks or bonds
that you can buy like a single stock.
- Example:
SPY (tracks S&P 500 index).
- It’s
good for diversification and lower risk.
⚖️ 6. What is a Dividend?
A dividend is money paid by a company to its
shareholders, usually from its profits.
- Example:
If a company pays $1 per share annually and you own 100 shares,
you receive $100 per year.
- Not
all companies pay dividends — growth companies often reinvest profits.
📊 7. What is a Portfolio?
Your portfolio is your collection of investments,
such as:
- Stocks
- ETFs
- Bonds
- Cash
Good investors diversify their portfolios to balance
risk and reward.
Would you like me to continue to the next group of
fundamental concepts — for example:
👉
“How do investors make money?”, “What is risk vs reward?”, “What
is diversification?”
or
👉
“How to choose a broker (like Schwab)?”