What Is Stock?

A stock is a piece of a company. Even if you own just one share of stock, you are a shareholder and you own part of that company.

Of all investment types, stocks carry some of the best potential for long-term returns.  That is to say, of all things you could buy and or do with your money, buying and holding stock for a long time (several years) has historically been one of the best ways to increase your savings.  

Since the broad stock market was first measured, stocks have returned roughly 10 percent annually, on average. The chart below compares that return to bonds over that period, as well as the current earnings on high-yield bank savings accounts.  In the second chart you can see the historical growth of $1 invested in stocks vs bonds vs cash.

The bad news? Stocks are also riskier than other investments, which means investors can lose money, especially in the short term.