We’ve put together a simple guide with examples that anyone just starting their journey in stock investing can understand. In 2025, this remains one of the most popular ways to grow your capital. At first, the stock market might seem complicated and overwhelming. But once you grasp the basics, you’ll realize it’s easier than paying your utility bills. In this article, we’ll break down what stocks are, how they work, and what first steps you need to take to start investing. You’ll learn about key concepts like dividends, IPOs, ticker symbols, and market capitalization. And, of course, we’ll cover some of the most popular brokers in different countries, along with their pros and cons. Let’s dive in!
What Are Stocks?
Stocks are securities that represent ownership in a company. Simply put, when you buy a stock, you become a partial owner of the company. Understanding what are stocks and how do they work helps investors see how this ownership grants the right to a share of the company’s profits (in the form of dividends) and potential growth in stock value.
Example: If a company has issued 1 million shares, and you buy 100 of them, you own 0.01% of the company. Feel free to add “co-owner of X company” to your resume 🙂
How Do Stocks Work? What Are Dividends?
Stock prices fluctuate based on supply and demand. If a company is doing well, its stock price rises. If it struggles, the price drops. Understanding what are stocks and how do they work helps investors navigate these changes. There are two main ways to make money from stocks. Dividends: Some companies distribute a portion of their profits to shareholders quarterly or annually. Example: If you own 10 shares of a bank that announces a $1.50 dividend per share, you’ll receive $15 in dividends.
Price Growth: If a stock’s price rises after you buy it, you can sell it at a profit. Example: Nvidia (NVDA) stock was $23 on February 25, 2023. By February 25, 2025, it had risen to $130, increasing more than fivefold.
What are IPOs, tickers, market cap, bulls & bears?
Investing can feel overwhelming due to all the jargon, but understanding what are stocks and how do they work will make it much easier. Let’s break down the key terms every beginner should know.
IPO (Initial Public Offering). When a company wants to raise money from investors, it can go public, making its shares available for purchase on the stock exchange. Before an IPO, a company is private. After the IPO, anyone can buy its shares. Example: In 2012, Meta (Facebook) went public, and its stock began trading on NASDAQ.
Ticker Symbol. Every company listed on an exchange has a unique stock symbol (ticker) used to identify its shares. Examples: AAPL – Apple , NVDA – Nvidia, AMZN – Amazon, RDDT – Reddit, PLTR – Palantir.
Market Cap (Market Capitalization). The total value of a company’s stock in the market. Formula: Stock price × number of shares. Example: If a company has 1 billion shares and each is worth $100, its Market Cap = $100 billion.
Now, let’s introduce you to some stock market slang that will keep you “in the know.” Bulls: Investors who believe the market will rise and actively buy stocks. If someone says “NVDA stock remains bullish,” that means people expect it to keep growing. Bears: Investors who expect the market to decline and might even profit from falling stock prices. A bear market occurs when stock prices drop, and investors are pessimistic.
Why do people invest in stocks?
People invest in stocks for many reasons, but for beginners, there are two primary ones:
1. Hedge Against Inflation. Many stable, well-known stocks tend to grow faster than inflation, helping protect your capital.
2. Easy Access. Investing has never been easier. There’s no need for in-person meetings or complex paperwork. All it takes is a brokerage app or an online platform. However, stock markets are volatile, meaning prices can swing unexpectedly, so investing always involves risk.
Where are stocks traded?
Now, let’s talk about stock exchanges—the marketplaces where investors buy and sell stocks. Understanding what are stocks and how do they work is essential for navigating these exchanges effectively. Each exchange has its own rules, features, and focus. The three most important exchanges are:
NYSE (New York Stock Exchange): The largest and oldest U.S. stock exchange. It operates as a traditional auction-based market and lists companies like Apple, Coca-Cola, and Boeing.
NASDAQ: The second-largest U.S. exchange, fully electronic, specializing in tech companies and fast-growing startups. Companies like Tesla, Amazon, Google (Alphabet), and Meta are listed here.
LSE (London Stock Exchange): The UK’s leading exchange and one of the oldest in the world. It features global companies such as HSBC, BP, and Unilever.
Access to international stock markets is provided through brokers, who offer platforms where you can buy and sell stocks in just a few clicks.
How to build an investment portfolio in 2025: 5 Steps
Step 1: Define Your Financial Goals – Long-Term or Short-Term?
Before getting started, it’s important to set clear goals. Your objective might be long-term wealth building, saving for a major purchase like a car or real estate, or short-term investing for quicker profits. There are two main types of investing:
Long-term investing – You buy and hold stocks without selling them frequently.
Pros: A steady path to building wealth with minimal effort; no need to constantly monitor the market. Cons: Gains remain unrealized until you sell. If your portfolio grows to $5,000, that money isn’t readily available—you’ll need to sell shares to use it.
Short-term investing – More frequent buying and selling to capitalize on price fluctuations.
Pros: Potential for quick profits. Example: You buy shares at $100 each, and when they rise to $120, you sell and lock in a $20 profit per share. Cons: Higher risk of losses. If you misjudge the timing and buy at $100, but the stock falls to $80, panic-selling results in a loss.
Step 2: Choose a Broker
A broker is your gateway to the stock market. You’ll need one to buy and sell stocks. When selecting a broker, consider: Trading fees, User-friendliness, Minimum deposit requirements, Customer reviews.
We’re sharing information only—this is not financial advice or a sponsored post. Brokers vary widely by country, and we do not include referral links.
Popular brokers for beginners in the US in 2025:
Robinhood – Commission-free trading, beginner-friendly app, start with as little as $1. Customer support has been criticized, though improvements are being made.
Fidelity – Excellent educational resources, zero commissions on stocks. The interface can feel overwhelming for beginners. Some services require a higher deposit.
TD Ameritrade (now part of Charles Schwab) – Thinkorswim platform offers powerful tools for learning and analysis. Schwab’s acquisition has raised concerns about potential service changes. The platform may be complex for absolute beginners.
Popular brokers for beginners in Canada in 2025:
Wealthsimple Trade – Commission-free stock trading, simple interface, low minimum deposit. Cons: Slow customer support response times.
Questwealth Portfolios (Questrade) – Low trading fees, free ETF purchases, pre-built portfolios for passive investors. Cons: Higher commissions for active traders; interface can be confusing.
BMO InvestorLine – Backed by a major bank, strong educational resources, access to multiple markets. Cons: Higher trading fees ($9.95 per trade); some accounts require a $5,000 minimum balance.
Popular brokers for beginners in the UK in 2025:
Trading 212 – Commission-free trading, user-friendly app, demo account available. Cons: Occasional withdrawal delays.
Hargreaves Lansdown – Wide range of investment options, high-quality research tools, well-established reputation. Cons: High trading fees (£11.95 per trade); the app may feel complex for beginners.
AJ Bell – Low fees for long-term investors, easy-to-use platform, access to ISA accounts. Cons: Customer support can be slow.
Popular brokers for beginners in Australia in 2025:
CommSec Pocket – Low-cost trades ($2 per trade up to $1,000), integrated with Commonwealth Bank.
SelfWealth – Simple interface, fixed commission ($9.50 per trade), access to both ASX and U.S. stocks. Cons: Limited beginner-friendly support.
Nabtrade – Backed by NAB, access to domestic and international markets, strong educational resources. Cons: Higher-than-average fees ($14.95 per trade under $5,000); not the most intuitive platform.
Step 3: Open a Brokerage Account
The account setup process typically takes 10–15 minutes, but verification can take longer. You’ll need: a passport or government-issued ID. Bank account details to fund your investment account
Step 4: Choose Stocks to Buy
Beginners should focus on stable, well-known companies—often called blue-chip stocks. Examples: Nvidia (NVDA), Apple (AAPL), Microsoft (MSFT).
Step 5: Make Your First Trade
Use your brokerage app to find the stock you want, enter the number of shares, and confirm your purchase. That’s it—congratulations, you’re now an investor! You might even want to update your LinkedIn profile 🙂
Top 3 Investing Tips for Beginners in 2025
1. Diversify Your Portfolio
Never put all your money into a single company. Spread your investments across different industries and regions. Example: If you only invest in U.S. tech stocks, you’re exposed to risks tied to the volatility of the IT sector. However, if you also hold European consumer stocks or Asian industrial giants, your portfolio becomes more resilient to local market downturns and economic crises.
2. Research the Market
Do your homework—check how a stock has performed over 1 week, 1 month, 6 months, 1 year, or 2 years. Read news and analysis about the company on our blog. For example, we have updated articles on Nvidia (NVDA), Reddit (RDDT), and Palantir (PLTR). If you need more sources, we recommend industry leaders like CNBC, Bloomberg, and Yahoo Finance.
3. Don’t Panic-Sell
The stock market is volatile, but over time, it has historically delivered positive returns. The key is to stay calm and think long-term. Example from personal investing: Sold Duolingo (DUOL) shares for $180 each on May 21, 2024, out of panic. As of February 25, 2025, the stock price is $389. Patience pays off.
Conclusion: What Are Stocks and How Do They Work
Hopefully, this guide has helped clarify what are stocks and how do they work in a simple and practical way. Our goal was to make investing more accessible, providing key insights for beginners. Good luck with your investments—stay patient and focused, and long-term success will follow!
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This article is for informational purposes only and does not constitute financial advice. The content reflects the author’s opinion and should not be interpreted as an investment recommendation.
