Stocks, company shares or equities are the backbone of many investors’ plans to build wealth. But that doesn’t mean they’re easy to understand. For many, the stock market feels like a foreign language that they want to learn but can’t seem to grasp. We’re here to help make it easier so you can better plan your investment strategy and achieve financial goals.

In the simplest terms, stocks are partial ownership of a publicly traded company. Companies issue stocks through a process called an initial public offering or IPO. Once on the public market, they can be bought and sold amongst investors just like any other asset, such as real estate or cars. Companies use stock to raise money for a variety of reasons, including paying off debt and funding growth plans they can’t — or don’t want to — finance with new loans.

The price of a stock fluctuates based on supply and demand. Investors may buy and sell shares at any time, but it’s typically more effective to hold a stock for the long haul in order to benefit from the potential for capital appreciation. In fact, long-term investors who stick with the stock market have generally been rewarded with greater returns than other investments like bonds or gold.

A stock’s value is determined by a number of factors, including market conditions and inside information. For example, if a company launches a successful product, demand rises and the stock price goes up. Conversely, if a company is rocked by scandal or economic uncertainty, the stock price may fall.

Investors can also group stocks into categories based on their size, as shown by their market capitalization. These include large-cap, mid-cap and small-cap stocks. Then there are the very smallest, which are known as microcap or penny stocks. While these stocks have the potential for the highest returns, they are considered more speculative than other types of stocks.

Another way to categorize stocks is by sector. This includes sectors like energy, technology and health care. Some investors may seek to diversify their portfolios by investing in different sectors, as stocks within particular industries tend to react in similar ways to economic conditions.

One of the most significant benefits of owning a share of stock is that you don’t have to worry about personal liability should the company go bankrupt and cannot pay its debts. In contrast, if you own real estate or a car through a partnership, creditors can seek to seize your personal assets. However, as a shareholder in a corporation, you only risk losing the value of your shares. That’s why investing in stocks is so popular.