START INVESTING: THE BASICS
FINANCES | DIY RETAIL INVESTOR SERIES
LAST UPDATED: FEBRUARY 15, 2021
LAST UPDATED: FEBRUARY 15, 2021
This article is designed for those who have zero knowledge about investments and wanting a starting point.
A stock is a security that represents ownership of a corporation to whomever owns it. However, this does not mean that you own part of the building or the company car that the corporation owns; instead, you own shares of the corporation.
A share is the unit of measure of a stock. Shares are issues by a corporation to raise capital (e.g. money) that is used to aid them to grow their business. There are only a finite number of shares issued by a corporation that is available for trading (e.g. buying and selling) at any given time, which is known as the outstanding shares of a corporation. Therefore, if the stock you are interested in is popular and there is high demand for their shares, the share price will increase as each share becomes incrementally more valuable. This is the way a stock prices fluctuates. If investors buy more shares, the stock price is driven up, and conversely, if investors sell off their shares, the price is driven down.
Shares are traded on stock market exchanges. The major exchange in Canada is the Toronto Stock Exchange (TSX). The major exchanges in the U.S. is the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotation System (NASDAQ). To be able to trade shares on any exchange, you need a broker that can facilitate buy and sell orders on your behalf.
Companies can choose which stock exchange to list themselves on, as long as they meet specific listing requirements. For example, Shopify is a Canadian e-commerce company listed both on the TSX and the NYSE. You can buy shares in Shopify on the TSX in CAD (SHOP.TO), buy shares on the NYSE in USD (SHOP), or you can buy in both stock exchanges separately. As you can tell, companies listed on the TSX have a .TO extension to their stock ticker name.
A stock is a security that represents ownership of a corporation to whomever owns it. However, this does not mean that you own part of the building or the company car that the corporation owns; instead, you own shares of the corporation.
A share is the unit of measure of a stock. Shares are issues by a corporation to raise capital (e.g. money) that is used to aid them to grow their business. There are only a finite number of shares issued by a corporation that is available for trading (e.g. buying and selling) at any given time, which is known as the outstanding shares of a corporation. Therefore, if the stock you are interested in is popular and there is high demand for their shares, the share price will increase as each share becomes incrementally more valuable. This is the way a stock prices fluctuates. If investors buy more shares, the stock price is driven up, and conversely, if investors sell off their shares, the price is driven down.
Shares are traded on stock market exchanges. The major exchange in Canada is the Toronto Stock Exchange (TSX). The major exchanges in the U.S. is the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotation System (NASDAQ). To be able to trade shares on any exchange, you need a broker that can facilitate buy and sell orders on your behalf.
Companies can choose which stock exchange to list themselves on, as long as they meet specific listing requirements. For example, Shopify is a Canadian e-commerce company listed both on the TSX and the NYSE. You can buy shares in Shopify on the TSX in CAD (SHOP.TO), buy shares on the NYSE in USD (SHOP), or you can buy in both stock exchanges separately. As you can tell, companies listed on the TSX have a .TO extension to their stock ticker name.