kinds of investments
Shares are just small portions of ownership interest in a corporation that you can buy or sell. For example, let’s say you buy a share of stock in Procter & Gamble for $100. If you hold onto it, and then eventually sell years later at $1000, you will have made $900 on that one share. But, you may not have $100 to make that original purchase, which brings us to...
If you don’t have gobs of money to toss into the market, but you still want to invest, fractional shares are a great option. They are different sized pieces of whole shares. Stockpile offers fractional shares for as little as $5, so virtually anyone can own a piece of their favorite stocks. Coca-Cola, Disney, Nike... you name it.
Exchange-traded funds (ETFs)
This is like the “Happy Meal” of stocks. It’s a single stock comprised of a bunch of different investments. They can be made up of company stocks, commodities (e.g. electricity or beef), bonds or some mixture of these. They even have their own ticker symbols. ETFs tend to be popular because they spread out your risk between multiple investments and tend to be affordable. Pro tip: you can also buy fractional shares of ETFs.
Stocks go up and down, but stock indexes generally go one direction over time: UP. An index fund buys the same exact stocks in a particular market index (like the S&P 500). These indexes reflect the value of a particular market or subset of that market. They’re a nice, hands-off way to diversify while earning solid returns. Some new investors just buy index funds.