The stock market exists as a way for entrepreneurs to finance business ventures using money collected from investors. When you purchase stock you essentially own part of a business. In exchange for purchasing stock in a company the investor becomes part owner of the company. Part owners receive a return on investment proportionate to the shares owned. Historically, they've had better returns than bonds and other investments, but often carry a higher degree of risk. Stocks can be an important part of your overall portfolio.

There are three primary reasons you may choose to incorporate quality stocks into your portfolio:

Over a longer period of time, stocks as a class have almost always provided higher returns than other investment alternatives. However, past performance does not guarantee future results.

Stocks offer the potential for rising income through dividend growth. Rising income can help protect you from inflation.

A diversified portfolio, consisting of stocks, bonds and other types of investments can help reduce the overall volatility of your portfolio, compared to owning just one kind of security.