Common stocks are shares of ownership in a company, representing a claim on part of the company's assets and earnings. When you buy common stocks, you become a shareholder, which means you have a stake in the company's performance. Common stockholders may receive dividends, which are payments made from the company's profits, but these are not guaranteed.
Investing in common stocks can offer potential for capital appreciation, meaning the value of the stocks may increase over time. However, common stocks also come with risks, as their prices can fluctuate based on market conditions and company performance. Investors should consider their financial goals and risk tolerance before investing in common stocks.