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Investing in stock gives you ownership of a piece of a company. Also known as “shares” or “equity,” stocks play an important role in many investment portfolios. Certain investments carry more risk than others. To better understand risk and its impact on your portfolio, check out our risk tolerance article.
Stocks allow you to build wealth and diversify your investment portfolio. People invest in stocks for a variety of reasons, but primarily it’s to get a return on investment. When you purchase stock in a company, you’re investing in the success of that company. The expectation is that over time you’ll earn a return on your investment—either because the stock price goes up or the stock pays dividends to its investors.
The minimum age requirement to open an account varies state to state. Depending on where you live, you have to be at least 18 or 21 years old.
Stocks are primarily bought and sold on exchanges, like the NASDAQ or the New York Stock Exchange (NYSE). Think of these exchanges as places where buyers and sellers are constantly trading goods of value—like any other marketplace.
You can buy stocks at any point in your adult life, but the longer you hold a stock, the more likely you are to realize long-term value. Here are some market trends to consider as you begin looking into investing.
There are a few options, depending on your situation:
If Ayco is offered through your employer, connect with one of our financial coaches to talk through your options and considerations.
Updated for tax year 2022