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Why do people buy stocks?

People invest in shares to generate returns. You can profit from owning shares in two ways:

  1. Companies can decide to return money to their shareholders via dividends. This is cash that is paid to investors for each share that they own.
  2. If the value of the shares increase. When investors sell their shares, they pocket the difference between the price at which the shares were bought versus when they were sold.

Nonetheless, people can lose money when investing in shares if the price at which they sell the stock is inferior to the price at which they bought it in addition to any costs associated with purchasing, owning and selling these shares.

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