The different sorts of stock are what often concern many new backers. That misunderstanding causes folk to turn away from the stock market altogether, or to make unwise investments. If you are going to play the stock market, you have to know what sorts of stock are available and what it all means!
Common Stock is a term that you will hear quite often. Anybody can get common stock, without reference to age, earnings, age, or money standing. Common stock is essentially part possession in the business you are investing in. As the company grows and makes money, the value of your stock rises.
On the other hand, if the company does poorly or goes broke, the value of your stock falls. Common stock holders do not participate in the daily operations of a business, but they do have the power to elect the board.
Along with common stock, there also are different classes of stock. The different classes of stock in one company are typically called Class An and Class B. The first class, class A, fundamentally gives the stock owner more votes per share of stock than the owners of class B stock. The facility to create different classes of stock in a corporation has been around since 1987. Many backers avoid stock which has more than one class, and stocks that have more than one class aren't called common stock.
The most upmarket sort of stock is of course Preferred Stock. Preferred stock isnt exactly a stock. It's a mix of a stock and a bond. The owners of preferred stock can lay claim to the assets of the company in the case of insolvency, 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 advised that the company sometimes has got the right to buy the stock back from the stock owner and stop paying dividends. That is the best situation possible!
So , invest smartly. Plan carefully. Take your life, your health and your contentment seriously.
Chet Halloway is a freelnace writer who works for Scottsdale Mortgage and Mortgage broker Los Angeles.
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