Stock is a savory cooking liquid that forms the basis for many dishes — particularly soups and stews. It is made by simmering animal bones, meat or fish (usually in wine) for a long period of time with aromatics like mirepoix and spices. The flavor of the stock comes from the bone marrow, cartilage and connective tissue. When cooked for long enough, the collagen in this tissue becomes gelatin and thickens the liquid. Stock can be made from almost any type of meat or fish, but chicken and beef are most common, because they contain the most protein and connective tissue. Bones of a variety of sizes are used, including the knuckle joint and rib cage. Some cuts of meat that are more likely to have a lot of connective tissue, such as shoulder cuts and neck bones, are also used. The resulting stock can be seasoned with salt, pepper, garlic and other spices. Some stocks can be further concentrated by reduction, and some, such as ham stock, are highly flavored with the addition of dried anchovies and kelp.

Companies issue stock to raise money and, if the company grows successfully, you may find that your shares of stock become more valuable — which is a form of capital appreciation. In addition to this, dividends — payments made to shareholders based on the profit or income generated by a company — can provide an extra source of income.

Buying and selling stocks is a process called trading, and the price of a share is determined by supply and demand. The more buyers there are, the higher the price, and vice versa. Prices can be influenced by news and media coverage, investor sentiment, macroeconomic trends and other factors.

Investors in stocks are often rewarded with strong returns on their investments over the long term, though short-term fluctuations are more frequent. This is because stocks offer more potential for growth than other types of investments, such as bonds.

It’s important to review your records and account statements to keep track of the performance of your portfolio, as well as any costs you are paying. You should also compare your portfolio’s performance against benchmarks, such as the S&P 500, a collection of around 500 of the biggest public U.S. companies, to help you figure out how much return on investment you’re getting for the risk you’re taking with each individual stock you invest in.

If you invest in a broad range of companies across industries and geographies, you will have more opportunity for diversification, which can reduce your overall risk and increase the potential for solid returns. Ideally, you will include both domestic and international stocks in your portfolio to give you exposure to the world’s most profitable businesses. This will help you build wealth and outpace inflation.