Judith R. Urich , Ph.D., C F P, Extension Family Resource Management Specialist Stock ownership provides a way to keep or increase financial worth over time. This broad statement may not hold true for an individual stock nor the market as a whole during relatively short periods of time. But a diversified portfolio of stocks in growing businesses should provide inflation protection if you're willing to make a commitment for several years.
Shares of stock represent ownership.
Your hope is that the company in which you own stock will grow and you will receive a fair return on your investment. Stocks can appreciate in value as profits are earned. Dividends, which represent an annual return on your investment, may also increase. In fact, one measure of quality in common stocks is to have a long record of earnings increases and frequent jumps in dividends. The two major types of stocks are common stocks and preferred stocks .