The stock market is a complex network that matches potential buyers of shares with sellers. Sellers can be companies that issue their own stock through an initial public offering (IPO) or, more commonly, investors who are looking to resell shares they purchased. The buyers can be individuals, investment funds, or even companies. The stock market allows these parties to negotiate prices that maximize fairness for each party. These negotiations happen in real time, and are recorded on a stock exchange which is then publicly available for anyone to see.
The most obvious reason to invest in stocks is that it can grow your money over time. However, it is important to remember that annual returns can vary widely. This is because stocks are affected by a number of factors, including economic growth, which can affect many or most companies in the same way. Other factors can be industry specific, or national and international events, which may have little impact on individual companies but can cause a large shift in the overall market.
Stocks can be purchased in a number of ways, either through a brokerage account with a broker that provides direct trading services, or by investing in a mutual fund or exchange traded fund (ETF), which pool together the money of multiple investors to purchase a basket of stocks. There are also a number of derivatives that can be used to invest in or trade stocks without owning them.