Financial Success Guide

What are Stocks?

Section 30 Module 6


Note: The typical rates of return quoted above are from stable mega-cap stocks over a period of 10-15 years. Mid-caps or small-cap stocks can give higher returns as well.


  1. When you buy stocks, you are lending money to a company to create new products, expand, and generate a profit.
  2. Stocks outperform most investments over time.
  3. Your are a part owner of the company whose stock you buy, and a share holder in the profits, and losses.
  4. If the corporate goes bankrupt, stock holders are paid at the very end, after all others are paid.
  5. Stocks can give dividend income as well as capital growth.
  6. Profits are shared with you in the form of dividend payments, and the stock price can go up or down, as well.

'Time in the market' is always better than 'Timing the market' - Warren Buffett. No one can time the market, but given enough time (typically 6-8 years), the chances of losing money in stocks is slim.

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