Different Types of Stock Investing
The different types of stock are what confuse most first time investors. This confusion causes people to turn away from the stock market altogether, or to make unwise investments. If you're going to play the stock market, you must know what types of stock are available.Common Stock is a term you will often hear. Anyone can purchase common stock, regardless of age, financial situation. Common stock is essentially part ownership of the company you are investing. As the company grows and earns money, the value of your stock. On the other hand, if the company does poorly or goes bankrupt, falling value of your stock.
Common share holders do not participate in the daily operations of a business, but they have the power to elect the board.The different classes of stock in a company are often called Class A and Class B. The first class A, essentially gives the stock owner more votes per share of stock than the owners of class B stock.
Ability to create different classes of stock in a corporation has existed since 1987. Many investors avoid stock that has more than one class, and stocks that have more than one class are not called common stock.The most upscale type of stock is of course Preferred Stock. Preference shares is not exactly a stock. It's a mix of a stock and a bond.
Owners of preference shares can lay claim to the assets of the company in the event of bankruptcy, and preferred stock holders get the proceeds of the profits from a company before the common stock owners. If you think you may prefer this preferred stock, be aware that the company typically has the right to buy the stock back from the stock owner and stop paying dividends.
Different Types of Stock Investing
