Have you always wanted to invest in stocks but didn't know how to start? The following primer on stock market investing will help beginners feel more comfortable.

During the last five decades, the stock market has enriched investors by an average of some 12 percent a year, putting savings accounts and certificate of deposits (CDs) to shame. Don't miss out on these tempting returns. By becoming a shareholder, you, too can collect similar rewards for years to come.

What's a stock?

Simply stated, a stock represents a share of ownership in a company. It's usually a very small part-public corporations routinely issue millions, or even billions, of outstanding shares. Even though you're an owner, your say in how to run the business at Microsoft or Coca-Cola will be extremely small. Most people don't buy stocks to influence policy, but to reap financial gain.

Making money

There are a couple of ways to make money in stocks. A very straightforward method is to buy companies that pay generous dividends. (A dividend is a part of the company's profits that are paid out directly to its shareholders. They're distributed quarterly, semi-annually, or annually. You'll receive a basic dollar amount for each share that you own.)

You can also buy a stock and hold it, hoping to sell your shares at a higher price sometime down the road. Buy low, sell high is the familiar mantra that you often hear.

How the market works

The shares of a company trade on stock exchanges like the New York Stock Exchange (NYSE), NASDAQ, or the American Stock Exchange (Amex). These are markets where both large and small investors buy and sell stocks. These days, almost all trades are electronic, so physical stock certificates rarely come into play anymore.

The laws of supply and demand set a stock price. When a certain company has more buyers than sellers, the share price goes up; conversely, more sellers than buyers lead to lower prices. This balance changes moment by moment, based on the company's financial strength, business results, new product announcements, macroeconomic factors, and so forth.

How to purchase stocks

Once the exclusive domain of the wealthy, with pricey full-service brokers and hefty trade commissions, the stock market is now within the reach of every American. The Internet gave birth to a host of discount brokers, whose inexpensive trading fees allow stocks to be purchased cheaply with the click of a mouse. All you need to do is open an account, fund it with a check or wire transfer, and start picking stocks. You can buy one share at a time, or dozens, or thousands. The number of shares that you purchase isn't important-it's the amount of money you invest that matters.

It's a good idea to read up on basic trading strategies before you start; but don't be afraid to gather knowledge as you go. There's no motivator for learning quite like having real money riding on your decisions.