Great — let’s start with the fundamental investing concepts ๐
๐งฉ 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.
๐ก 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.
๐ฐ 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.
๐ฆ 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.
๐ 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.
๐ 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:
๐
“How do investors make money?”, “What is risk vs reward?”, “What
is diversification?”
or
๐
“How to choose a broker (like Schwab)?”