Pick a company on the market and describe in one sentence what it does, without deciding to buy yet.
A stock is a share of ownership in a company.
A stock’s price changes in the market and is not a promise of future value. A company may distribute part of its profits as a dividend, but it is not required to do so. You can gain from a price increase or lose from a price drop; in an extreme case you can lose your entire investment.
If you bought two shares at 50 ₪ each, the cost is 100 ₪ before fees.
Pick a company on the market and describe in one sentence what it does, without deciding to buy yet.
A fictional company has 1,000 equal shares and someone owns 10. Their ownership is 1%, not 10%. At a price of 20 per share, the holding is worth 200; that is not the company’s cash balance. A price change alone does not change this ownership fraction. Keep share quantity, price per share and the value of the whole holding in separate columns when reading a portfolio.
Concepts that help you compare
Issuing and trading shares: who receives the money?
Issuing new shares can raise money for a company. In trading between investors, the seller usually receives the money. Tradable shares allow investors to buy and sell on the market. Public companies have reporting obligations, but reporting and oversight do not guarantee success. A private company is not necessarily small, and a public company is not necessarily government-owned. Trading between investors is not always new money entering the company.
Comparison example: Buying from another investor on the stock exchange usually transfers the proceeds to the seller. Issuing new shares by the company can raise money for the company.
A fund pools investors’ money and invests it according to a defined policy. An index measures the performance of a group of assets. An index-tracking fund tries to follow an index; an ETF trades on the exchange during trading hours. The risk depends on what the fund holds. A single-sector fund is not necessarily well diversified.
Comparison example: The S&P 500 is a stock index. You can learn about it, but you cannot buy the index itself as a stock; there are products that track it.