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Investing
Investing Basics: Stocks & ETFs
Demystify the stock market and learn how index funds make investing accessible for beginners.
8 min read Earn 100 XP 4 sections
1
What is a stock?
A stock is a fractional ownership stake in a company. When the company grows, your stake grows. When it struggles, so does your investment. Companies issue stock to raise capital; investors buy hoping to share in future profits.
2
ETFs: the smarter starting point
Exchange-Traded Funds (ETFs) bundle hundreds of stocks into a single investment. An S&P 500 ETF (like VTI or SPY) owns tiny pieces of 500 major US companies. Instant diversification, low fees (~0.03%), and historically 10% average annual returns.
Warren Buffett recommends index funds for most people — including professional investors.
3
How to start
1. Open a custodial account (under 18) or Roth IRA if you have earned income
2. Pick a low-cost broker: Fidelity, Schwab, or Vanguard
3. Buy a total market ETF (e.g. VTI)
4. Set up automatic monthly purchases
5. Don't touch it for decades
2. Pick a low-cost broker: Fidelity, Schwab, or Vanguard
3. Buy a total market ETF (e.g. VTI)
4. Set up automatic monthly purchases
5. Don't touch it for decades
Example
$50/month into VTI since age 16 at historical 10% returns = ~$670,000 at 65.
4
Risk and time horizon
The stock market drops regularly — 10–20% corrections are normal. The key: time in market beats timing the market. Over any 20-year period, the S&P 500 has never lost money. Young investors have the luxury of riding out volatility.
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