Stocks Education

Learn about investing in stocks

Understand the basics of stocks

What are
stocks? tab 1 of 3 Why invest in
stocks? tab 2 of 3 Things to
consider tab 3 of 3

What are stocks?

Stocks, also called equities, help drive growth in long-term portfolios. When you invest in stocks, you own shares in companies, represented by the number of shares possessed. The value of your investments reflects how well those businesses perform.

See what stocks can do for your portfolio and learn about possible risks.

Stocks Can Offer Investors

  • Historically higher rate of return over longer holding periods, through past performance is no guarantee of future results
  • Suitable investment choices for long-term investors
  • The opportunity to invest in companies that align with your values
  • Tradability throughout the day
  • The ability to invest using a growth strategy, value strategy or combination of the two

Know the Risks Associated with Stocks

While stocks often have higher growth potential, they are more vulnerable to volatility and carry more risks than other investments
Stocks can require more time to research, and familiarity with financial statements, annual reports and news about the company are key to success
Diversifying your portfolio could require more effort than if you were to invest in ETFs or mutual funds, which may offer built-in diversification
In the event of a company going defunct, preferred stockholders, bond holders and other creditors will get paid out before common stockholders

Investors Should Consider

  • Your confidence in the company you're investing in
  • Your response to market volatility and how it fits into your long-term investing strategy
  • Any capital gains taxes that will apply if you sell stock for profit
  • Key data points like earnings per share, market capitalization, dividend yield, and more

What are the different types of stocks I can invest in?

Common Stock

Common stock, simply referred to as stocks, as shares of ownership in a corporation. A stock in an instrument that signifies an ownership position, or equity, in a corporation, and it represents a claim on its proportionate share in the corporation's assets and profits.

Preferred Stock

Preferred stocks are capital stocks that provide a specific dividend that is paid before any dividends are paid to common stockholders, and that takes precedence over common stock in the event of a liquidation.

Growth Stock

Growth stock is company stock that is growing earnings and/or revenue faster than its industry or the overall market. Such companies usually pay little or no dividends, preferring to use the income instead to finance further expansion.

Value Stock

A value stock is a stock with a price that appears low relative to the company's financial performance, as measured by such fundamentals as the company's assets, revenue, dividends, earnings, and cash flows.

Restricted Stock

In a restricted stock plan, participants receive shares that are subject to certain restrictions from the company without cost or at a price determined by the company. They typically vest in increments over a period of several years. Dividends or dividend equivalent rights may be paid, and award holders may have voting rights during the restricted period.

Income & Preferred Stock

Income & preferred stocks are a fund that normally seeks a high level of current income through investing in income-producing stocks, bonds and money market instruments, or a fund that invests at least 65% of its assets in preferred securities, often considering tax code implications.

Common questions about stocks

If you're looking for more information, check out these responses to some of the common questions investors have about stocks
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Want to learn more about stocks?

Whether you're looking to understand the basics of stocks or you're ready to dive into the technicalities, Merrill has the educational resources for you.

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Investing involves risk including the possible loss of principal investment.

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Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.
Diversification and asset allocation do not ensure a profit or protect against loss in declining markets.

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Investing in securities involves risks, and there is always the potential of losing money when you invest in securities.

Asset allocation, diversification, and rebalancing do not ensure a profit or protect against loss in declining markets.
The performance data contained herein represents past performance which does not guarantee future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. For performance information current to the most recent month end, please contact us.

Net Asset Value (NAV) returns are based on the prior-day closing NAV value at 4 p.m. ET. NAV returns assume the reinvestment of all dividend and capital gain distributions at NAV when paid.

Market price returns are based on the prior-day closing market price, which is the average of the midpoint bid-ask prices at 4 p.m. ET. Market price returns do not represent the returns an investor would receive if shares were traded at other times.

Returns include fees and applicable loads. Since Inception returns are provided for funds with less than 10 years of history and are as of the fund's inception date. 10 year returns are provided for funds with greater than 10 years of history.

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