Stocks are a major part of many portfolios because they offer the potential for higher returns than bonds or cash alternatives. But stocks come with risks that can be substantial, even if the overall market is rising. And those risks can be magnified by the gyrations of individual companies’ stocks.

A company issues shares to raise money for its operations. Investors buy and sell those shares on a public exchange like the New York Stock Exchange or Nasdaq. Those purchases and sales make up the “stock market.”

The most common way to buy stocks is through mutual funds or exchange-traded funds, which invest in many different companies and industries, and are typically considered lower risk than individual stocks. But you can also buy individual stocks, using a brokerage account. You’ll need to find a broker that offers low commissions, free research and good customer service. You’ll also need to determine how much you want to invest and what type of order you should place (market or limit).

Once you have an investment account, it’s time to pick stocks. As you do your research, keep in mind that the primary goal is to become a part owner of a company by buying shares in that company. That’s why some investors choose to start small, by purchasing just a few shares of a company before investing more money. That way, they can get a feel for how it feels to be a shareholder and see if they have the stamina to ride out periods of low market growth.

When stock prices rise, it’s because demand for the shares is greater than the supply. When the opposite occurs, stocks decline. It’s important to understand this process because, over the long run, the performance of stocks in particular sectors tend to correlate with economic conditions. For example, when consumers have less money to spend, industries such as information technology and consumer discretionary may suffer. Consumer staples, utilities and health care tend to be less affected.

In addition to earning capital gains when you sell your shares for more than you paid, shareholders can earn dividends from the company’s profits. But companies are not required to pay dividends, and their ability to do so depends on a number of factors.

In short, stock markets are unpredictable. Timing the market is difficult, and even the best investors don’t usually make it big. But those willing to commit to a long-term strategy and stick with the market have historically earned the best returns. And if you plan to retire or invest in your children’s education, stocks have the power to help support those goals. So don’t be scared of stock — instead, embrace it. And remember, it’s almost always better to buy low and hold on than to panic and sell high. The latter approach can be costly, and the former is likely to produce a more steady return over time. Learn more about how to buy stocks and other investments.