Back to Basics: What Exactly is a Stock?

January 05, 2012

With the start of a new year, it might be a good time to take a step back. As financial planners and educators, we can get so caught up in the complexities of things like employee benefits, various investment strategies, and tax laws that sometimes we forget that sometimes people just really need to understand the basics. I recently asked a group of workshop participants what exactly a stock was and one person said it was just a piece of paper. I thought about it later and realized that his answer reflected many of the misconceptions people have about investing (aside from the fact that we don’t even really use paper stock certificates anymore). In fact, there’s a surprising amount of insight you can gain just from examining some of the basic investment vehicles. Continue reading “Back to Basics: What Exactly is a Stock?”