Stocks are a key part of many investors’ plans to build wealth. They’re known as company shares, equity or securities, and there are different types with different characteristics and benefits. Here’s some helpful guidance to help you understand them all.

When people buy stock, they’re buying a fractional ownership share in a business. If the business does well, the value of the stock can increase and investors might be able to sell it for more than they paid for it. In addition to this capital appreciation, companies can make money by paying dividends to shareholders. Some investors may also receive tax benefits for holding stocks.

To trade stock, you’ll need a broker. Some brokers have online platforms that allow you to do this, while others offer telephone or face-to-face service. NerdWallet’s ratings of the best online brokerages and robo-advisors take into account 15 factors, including account fees and minimums, investment choices, customer support and mobile app capabilities.

You can classify stocks in a number of ways, such as by sector, country or industry. The way you classify stocks can affect your investing strategy and how much risk you’re willing to take on.

A stock’s price can fluctuate based on the market’s whims or due to the fundamentals of supply and demand. In the latter case, demand for a particular type of company might be higher or lower than expected due to economic conditions. This can push up or down the prices of individual stocks and entire sectors.

Whether you’re investing in a single stock or an entire sector, you can make money by following market news and understanding the risks of each. You can also find a good fit for your portfolio by following guidelines to build your financial plan, solidify your strategy and choose your investments.

Companies raise funds by selling stock, which gives them the cash they need to grow and expand. This is different from a loan, which operates like a debt from creditors to the company. Depending on the type of stock, owning stock can give shareholders both voting rights and income from dividends.

Valuing a company’s stock is an important skill that all investors should develop. There are various methodologies for doing this, but one of the most common is called fundamental analysis and focuses on examining measurable attributes. This approach is typically associated with investors and financial analysts, who look at historic ratios to justify the value of a particular company’s stock.

In the long run, the best return on a stock can come from understanding what it’s actually worth. A stock’s intrinsic value can be influenced by many things, such as its defensible economic moat (its ability to ward off new market participants), user base or brand recognition. Ultimately, your goal should be to figure out what a specific stock is truly worth to you and then decide if it’s a good fit for your portfolio.