Buying stocks is a big problem. After all, it is your luck at stake and making hasty investments without careful judgment is a big mistake. Before finally deciding to invest your money in a particular company, you must make it clear that you have done your homework properly and well.
One of the main things that you must learn and understand about investing is that stocks are not one and the same. Stocks differ from each other in certain ways so if you want to find a good stock to buy, you must first determine the type of stock that you really want to own.
Two General Categories of Stocks
There may be many good stocks to buy on the market but on a general note, stocks are only classified into two categories: ordinary shares and preferred shares. You can easily get point and figure charts for more insight in less time.
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Common Stock – Of the two stock categories, these are the most popular ones. Usually, this is the type of stock that many companies sell. Common stock owners can be called "partial" owners of the company.
Because of them, they are endowed with certain rights to choose when the need for it arises. In the case of dividends received, it is optional on the part of the company (especially on the Board of Directors) whether or not their ordinary shareholders will receive it.
Preferred Stock – A preferred owner as well as a common stock owner. They also own a portion of the company. However, preferred shareholders enjoy voting rights owned by ordinary shareholders. Another thing that separates preferred stock owners from ordinary owners is that they receive fixed dividends from the company on a regular basis.