The stock market is a place where people can buy and sell fractional ownership of publicly traded companies. Stocks, also called equities, are issued by companies to raise capital for operations and expansion. Purchasing stock gives you partial ownership in the company, as well as voting rights (depending on the type and class of stock).

The goal of the stock market is to match up buyers with sellers at transparent prices. When you place a trade with your broker or an online trading platform, it is sent to the market where it is matched up against orders from other investors. The trade is executed at the bid price if you are buying or the ask price if you are selling. The market’s participants negotiate these prices, with the ultimate goal of maximizing fairness for both parties.

One of the most popular reasons for investing in stocks is their potential to grow with the economy. When the economy grows, companies’ profits rise, and stocks typically appreciate in value.

While it’s impossible to predict how the stock market will perform, historically, long-term investment returns have been positive. Short-term fluctuations can be hard to stomach, but staying invested through market upswings and downswings has been shown to help increase your overall returns. Many people invest in what are known as ETF’s (exchange-traded funds) which are designed to track the performance of groups of companies or industries. This helps diversify their portfolio so that they are not as reliant on the performance of any one company.