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Different Types of Stock

Guest post by: Oliver Noel

Article Overview: The different types of stock are what confuse most first time investors. That confusion causes people to turn away from the stock market altogether, or to make unwise investments. If you are going to play the stock market, you must know what types of stock are available and what it all means!

Different Types of Stock

The different types of stock are what confuse most first time investors. That confusion causes people to turn away from the stock market altogether, or to make unwise investments. If you are going to play the stock market, you must know what types of stock are available and what it all means!

Common Stock is a term that you will hear quite often. Anyone can purchase common stock, regardless of age, income, age, or financial standing. Common stock is essentially part ownership in the business you are investing in. As the company grows and earns money, the value of your stock rises. On the other hand, if the company does poorly or goes bankrupt, the value of your stock falls. Common stock holders do not participate in the day to day operations of a business, but they do have the power to elect the board of directors.

Along with common stock, there are also different classes of stock. The different classes of stock in one company are often called Class A and Class B. The first class, class A, essentially gives the stock owner more votes per share of stock than the owners of class B stock. The 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. Preferred stock isn’t exactly a stock. It is a mix of a stock and a bond. The owner’s of preferred stock can lay claim to the assets of the company in the case of bankruptcy, and preferred stock holders get the proceeds of the profits from a company before the common stock owners. If you think that 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.

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Article Tags: confusion, stock market, time investors, types of stock, unwise investments
Referred by: http://www.empowerentrepreneurs.info



Related Forum Posts
Re: Do Women Play the Stock Market? - I also play Stock Market.....
Re: Do Women Play the Stock Market? - Thankfully, I do the finances in our household so there will be no surprises here! I cannot imagine not knowing what is going on. (In case you're wondering, my husband and I do consult with each other about major purchases though.) Until recently, I've only played a little in my RRSP's. I can't say I made any huge gains. I've done much better in real estate. My sister has done really well trading her RRSP's in penny stocks and if I remember correctly, she recently doubled her money in only a year. I'm hoping to change my own Stock Market record though! I got in on the ground level of a new green energy company in BC. It began as a private offering at 50 cents a share and now is offered at $1 a share only 3 months later. It's selling like hot cakes and will be closed to sales by the end of April (if there are any shares left). It was just evaluated by an independent company at around $6 a share. The company plans to be on the TSX this year and I expect to make a good return. Wish me well!


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