A stock (or share) represents partial ownership in a publicly traded company. Owning 100 shares of Apple makes you a tiny part-owner of Apple, entitled to a proportional claim on assets and earnings. Stocks generate returns through price appreciation (selling for more than you paid) and dividends (cash payments from company profits). Common stock includes voting rights at shareholder meetings; preferred stock has higher dividend priority but no voting. Over the long term, US stocks have averaged 10% annual nominal returns (about 7% after inflation), outpacing every other major asset class. Individual stocks carry significant risk; broad index funds spread the risk across hundreds or thousands of companies.
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401(k)
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Active Management
Active management is the attempt to outperform a benchmark through stock selection, sector rotation, market timing, or any…
Alpha
Alpha is excess return relative to a benchmark, adjusted for risk (beta). Positive alpha means an investment outperformed…
Asset Allocation
Asset allocation is the percentage split of your portfolio across asset classes — typically stocks, bonds, and cash,…
Backdoor Roth
The Backdoor Roth is a strategy for high earners (above the Roth IRA income limit) to contribute to…
Beta
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Stock
August 22, 2026 · Aditya Gupta
Investing
Related terms
401(k)
A 401(k) is an employer-sponsored retirement plan where employees contribute pre-tax salary that grows tax-deferred until withdrawal. The…
Active Management
Active management is the attempt to outperform a benchmark through stock selection, sector rotation, market timing, or any…
Alpha
Alpha is excess return relative to a benchmark, adjusted for risk (beta). Positive alpha means an investment outperformed…
Asset Allocation
Asset allocation is the percentage split of your portfolio across asset classes — typically stocks, bonds, and cash,…
Backdoor Roth
The Backdoor Roth is a strategy for high earners (above the Roth IRA income limit) to contribute to…
Beta
Beta measures a stock's volatility relative to the overall market (S&P 500 = beta of 1). Stocks with…
