Consider a firm as a gigantic cake. When you buy stock, you are not purchasing the entire cake, but rather a small portion. This slice represents a share of the company’s ownership, and its value fluctuates in response to the company’s performance. If the company does well, your slice will increase in value, potentially making you a profit when sold.
Consider stocks to be certificates that entitle you to a portion of the company’s profits. Some companies also pay dividends to shareholders, such as sharing a percentage of their profits. While there is always risk involved, holding stocks can help you build wealth over time when firms you trust in flourish.
So, the next time you hear about “the stock market,” realise that you are not only hearing about numbers, but also about tiny slices of ownership in innumerable enterprises, all striving to build a bigger and better cake.