Buying a stock means you are buying a tiny slice of a real company. When you own a share of a company like Apple, Disney, or Tesla, you aren't just a customer anymore . . . you are a shareholder and a partial owner.

How the Stock Market Works

Think of the stock market like a giant, global flea market that is open every weekday. Instead of selling clothes or furniture, people are buying and selling "shares" of companies.

• The Exchange: Stocks are traded on "Exchanges" like the New York Stock Exchange (NYSE) or the Nasdaq.

• The Price: The price of a stock goes up or down based on how many people want to buy it. If a company announces a cool new product, more people want to buy the stock, and the price goes up.

Two Ways You Make Money

1. Capital Gains (Price Growth): This is the most common way. You buy a share for $50, and a few years later, the company has grown so much that people are willing to pay $100 for that same share. You sell it and keep the $50 profit.

2. Dividends (The "Thank You" Check): Some successful companies share their profits directly with you. Every few months, they send a small amount of cash for every share you own. You can spend this cash or use it to buy even more stock.

Essential Facts for You and Your Parents

Review these four points together to understand the modern stock market in 2026:

1. Fractional Shares (Starting with $1)

In the past, if a single share of a company cost $500, you couldn't buy it unless you had the full $500. In 2026, almost all major brokerages allow Fractional Shares. This means you can buy "slices" of a stock for as little as $1 or $5. You don't need to be rich to start owning the world's biggest companies.

2. Bull vs. Bear Markets

The market has a personality that changes over time:

• Bull Market: When the economy is strong and stock prices are rising. (Think of a Bull charging up!)

• Bear Market: When the economy is struggling and prices are falling. (Think of a Bear hibernating or swiping down.) It is important to know that "Bear Markets" are a normal part of history and usually lead back to a "Bull Market" eventually.

3. The Index Fund Shortcut

Trying to pick one single company that will be successful is very hard. Many investors use Index Funds or ETFs (Exchange-Traded Funds).

• These are "baskets" that hold hundreds of stocks at once.

• For example, an S&P 500 Index Fund buys a little bit of the 500 biggest companies in America. If one company fails, you still have 499 others working for you.

4. Risk and Volatility

Unlike bonds, stocks can be "bumpy." Their prices can change a lot in a single day. This is called Volatility. Because of this, stocks are best for money you don't need for at least 5 to 10 years. This gives your money time to recover if the market has a bad year.

Portfolio Strategy

Most beginners start by putting the "lion's share" of their money into a diversified Index Fund (like one that tracks the whole stock market) and then using a smaller amount to buy individual stocks of companies they personally know and use.

Pro-Tip: Look for companies with a "Moat." In the old days, a moat protected a castle. In business, a moat is something that makes it hard for other companies to compete (like a famous brand name or a secret technology).