When people say “I bought Apple,” or “I have some Google,” what they almost always mean is that they bought common stock.

Common stock is the default type of equity. It is what you get when you buy shares through a brokerage, invest in an ETF, or hold a mutual fund that owns US companies. It gives you three things.

The first is a claim on future profits. If the company grows and becomes more valuable, your shares become worth more. If the company distributes profits as dividends, you receive a proportional share.

The second is a vote at the annual general meeting. One common share, one vote. As a shareholder you can vote on board members, on major acquisitions, on executive pay packages. 

For most individual investors, this vote is largely ceremonial. When you own a hundred shares of a company with billions outstanding, your vote does not swing outcomes. But the right exists, and the legal framework that enforces it is one of the strongest in the world.

The third is a residual claim on assets. If the company winds up, whatever is left after creditors have been paid belongs to the common shareholders. In practice, this is often very little or nothing. It is the last place in the queue.

Common stock is also called ordinary shares, which is why you might see Alphabet listed as “Alphabet Inc. Class A Common Stock” in a fund’s holdings. More on that Class A part shortly.