Invest · Lesson 2 of 3
What is a stock?
A stock is a tiny ownership stake in a real company. When you buy a share, you’re betting that business will grow — and accepting that it might not.
1Learn
- How you make moneyThe share price rises over time, or the company pays a dividend. It takes patience — stocks aren’t lottery tickets.
- The real riskOne company can crash — even to zero. In bankruptcy, stockholders are paid last and often get nothing. That’s why single-company bets are risky.
Think of it like thisIf a sneaker brand has 1 million shares, buying 1 share means you own one-millionth of that business. When the company profits, your slice can become worth more.
2Try it Activity
You buy $500 of one stock. Then…
Worth about $600
The company grew 20%, and your ownership stake grew with it. You don’t have to do anything — you still just hold the shares. If you sell, you keep the gain (minus any taxes).
Can become $0
In bankruptcy, employees, lenders, and bondholders get paid first. Stockholders — the owners — are last in line and often get nothing. This is exactly why diversification matters.
3Check
Remember
A stock is ownership. Any single year can drop 30–40%, but long stretches of the US market have historically recovered. Panic-selling hurts most — which is why beginners usually start with funds.
Quick check
You invest $500 in a single stock. The company goes bankrupt. What happens?
In bankruptcy, employees, creditors, and bondholders are paid first. Stockholders often get nothing — that’s why diversification matters.