Finance glossary
Stocks
Also known as: Stock, Equities
In simple terms
Stocks are a way of owning a small slice of companies. In everyday use, “stocks” usually means investing in shares of companies listed on the stock market.
On this page
What does stocks mean?
Stocks represent ownership in companies. In everyday language people talk about “buying stocks” to mean investing in company shares — becoming a part-owner and sharing in the company’s successes and setbacks.
The word is often used loosely: strictly, “stock” is the general term for a company’s ownership capital, while “shares” are the individual units of it. Day to day, most people use the two words interchangeably.
How stocks work
You buy stocks through an investment platform or broker, and their value rises and falls with the fortunes of the companies and the wider market. You may also receive dividends if the companies pay them.
Buying individual stocks concentrates your money in a few companies, which can mean bigger gains but also bigger losses — if a company does badly or fails, you can lose some or all of what you put in. Many investors reduce this by buying funds that hold lots of stocks at once.
How could this affect me?
Over the long term, stocks have historically offered higher potential returns than cash savings, but with far more ups and downs and no guarantee. Their value can fall as well as rise, and you could get back less than you invested.
Stocks generally suit money you can leave invested for at least five years and losses you could afford to bear. Spreading across many companies — often through funds — reduces the risk of any single one dragging you down.
Things to watch out for
- Stocks can fall in value, and you may get back less than you put in.
- Holding just a few companies concentrates risk — one failure can hit you hard.
- Higher potential returns come with bigger swings and no guarantees.
- Past performance is not a guide to future returns.
Know your rights
- A firm selling or holding stocks for UK retail investors must be authorised by the FCA, and its promotions must be clear, fair and not misleading.
- If an authorised UK investment firm fails, FSCS may protect eligible investments up to £85,000 — this covers the firm failing, not losses from the stocks falling in value.
- If you are badly advised or treated unfairly, you can complain and escalate to the Financial Ombudsman Service.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- FCA, Investing basics (opens in a new tab). Accessed 22 Aug 2026.
- MoneyHelper, How to invest — shares and stock markets (opens in a new tab). Accessed 22 Aug 2026.