When you own shares of stock you become part owner of a company. If the company does well, the value of your stock should go up over time. If the company does not do well, the value of your investment will decrease.
Companies issue two types of stock, common and preferred.
Common Stock Common stock is the basic form of ownership in a company. People who hold common stock have a claim on the assets of a firm after those of preferred stockholders and bondholders. Preferred Stock Preferred stock is ownership in a company, which has a claim on the assets and earnings of a firm before those of common stockholders but after bondholders. The safety of the principal of preferred stock is greater than that of common stock. It has other methods, such as issuing bonds or getting a loan from the bank.