If you’re looking to build your finances and grow your wealth, you should consider getting into investing in stocks.
You may have already thought about starting your own investment portfolio and doing background research on stock trading for beginners. There are lots of stocks investment opportunities and activities available that you can take advantage of to build up your portfolio. To help you understand the various types of investment opportunities available, here’s a deeper dive into different types of stocks:
Stocks are divided into two many types: common and preferred. Aptly named, common stock is the type of stock the most people invest in. Those who buy common stock in a company are considered shareholders and have some ownership in the company. These stock owners vote on decisions related to the company, like electing individuals to a board of directors.
As the company earns more, common stock value goes up. However, if the company loses its money and fails, stockholders will be left with nothing. Many of the best apps for buying stocks that are available today have tons of common stock options for you to invest in.
Preferred stock is a cut above common stock: preferred stockholders are given rights to receive dividend payments before common stockholders, and will have the opportunity to get some money back should the company they invest in fail. While the preferred stock is often a better deal, many companies do not offer it as an investment option.
Common and preferred stocks can be divided further into other categories related to specific details about the company. One of the most common is related to a company’s marketing capitalization, or the company’s value. They are divided into three categories:
Large-cap: Value of $10 billion or higher
Mid-cap: Value over $2 billion but less than $10 billion
Small-cap: Value over $300 million but less than $2 billion
Domestic & International
Stocks are also divided based on location. A stock is considered a domestic stock if its headquarters are located in the United States. For companies with headquarters outside of the United States or stocks that are based in the United States but only sell international products, they are considered international stocks.
Growth & Value
Stocks are considered growth stocks if they have a high risk, high reward. They are typically growing at a fast pace, and as a result are typically priced higher due to their potential.
Alternatively, value stocks are considered to be underpriced and a value purchase. Generally, these stocks are anticipated to experience some type of growth in the future, but may be struggling in the short term.
As you’re looking into which stocks to invest in, it’s helpful to know these types of stocks to understand their potential and what is capable under your investment. Pair this knowledge with your background research on which stocks to invest in.
Once you’re ready to start investing, be sure to look into the best apps for buying stocks so you can immediately purchase stocks you’re interested in.