Although we at CGL Financial are not licenced to sell or advise on individual stock investments we can advise you on various mutual funds that have a weighting in stocks and other equity investments. Consequently we believe it is important to have an understanding of how a stock works. The following is a useful primer on the workings, risks and advantages of owning stocks via a mutual fund that may contains various kinds of equity investments. If you wish to own individual stocks or other equity securities other than a mutual fund please consult a stock broker or other qualified professional.
A stock is an ownership share in a corporation. Each share denotes a part ownership for a share owner, stockholder, or shareholder, of that company. Stocks are traded on exchanges all over the world, the largest is the New York Stock Exchange or NYSE. In Canada the largest stock exchange is the TSX (Toronto Stock Exchange).
Stocks are individually identified by their ticker symbol. For example, General Electric is identified as GE. Investors can buy a share in companies, or a share of a diversified portfolio of stocks. Individual Investors can purchase shares for themselves, at a brokerage of their choice, or direct from the company, wherever they have an account set up.
There are different types of shares, common, preferred and unlisted. Most shareholders purchase common stock. The goal is for capital appreciation, as well as income from interest, and dividends. Over time, stocks have outperformed fixed income investments such as GIC’s cash and bonds. This takes into account depressions, world wars, and other world changing events.