Owning a stock is like owning a part or a share of a company. Before the technological revolution, shareholders would be issued a certificate proclaiming them as an owner of X amount of shares. Today, share ownership is verified digitally and the vast majority of stock trading is done online. Before computers, to sell stock you would have to physically take your certificate and sell it. Today, a few clicks on your computer is all it takes to buy and sell shares. Moreover, many brokers offer relatively inexpensive flat fees to make a trade.
Stocks also come in different types. The most common is the aptly named common stock. This is basic stock in a company with a claim to dividends. When people discuss stocks without mentioning which type, the majority of the time they are taking about common stock.
Going higher up the ladder, one gets to preferred stock. This is a share of ownership in the company with special rights, such as guaranteed dividends, more voting power (depending on the company), and if the company is liquidated, preferred shareholders get paid before common shareholders.
Stocks are very flexible and different companies have various classes of stock that they define. One benefit of earning income on stocks in the United States is the capital gains tax, which may be less than regular income tax.
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