Category: stock market

Learning About Preferred Stocks and Common Stocks

StocksIn the business of investing, especially if you will be dealing with stocks, you must know their types and what exactly will they do to your money. This way, you can keep your options open, as to what kind of stock would work better for you. But first, let’s first handle their definition, then allow me to break down their differences to you so you have a better understanding of them.

Let’s start with preferred stock. Anyone who holds it gets a fixed dividend. If a company is making more than its assets than their common stock, then they belong to this class. The dividends should be paid out from its preferred shares before dividends to common shareholders. Note that shares of this one has nothing to do with a stockholder’s voting rights.

Now, I’m not talking about one gets to vote who in the next presidential election. This is about who gets a say from decisions regarding the corporate rules and regulations to who gets to be a part of the board. Basically, if there are any major changes in a corporation, stockholders have the right to have a vote on it, otherwise, changes can’t be made.

This stock has all the features of debts, which also helps in paying fixed dividends and even common stocksequities. Preferred stocks could have a higher value just because of those things that it could do to a stockholder’s investment.
I would like to say that if you are a stockholder in this kind of stock, you are someone of priority compared to those who belong to the class of common stockholders in the area of dividends. The advantage of this one is that its stocks get a lot of yields than the other one and stockholders can get their shares on a monthly basis and even quarterly (depends on the voting of course).
If you are wondering how do they fix the dividends? Well, the basis is through a benchmark interest. This is a good option because supposed a company is starting to go downhill, shareholders on this stock could get their payment in arrears before common shareholders can get theirs. They might not get it in cash, but they would still be able to get it accumulatively.
Let us now talk about the common stock. Basically, it is the money or fund that a corporation has.

The people who own it are generally under the management of the board. If you are a common stockholder, then keep in mind that you are not the priority when it comes to exactly owning funds in the corporation. But don’t get me wrong, you still have your rights to your investment in the company when it is time for liquidation, BUT only after other stockholders superior to you are completely paid.
Now, that you know about these two, you can now decide what type of a stockholder would you rather be. I’ll be glad to walk you through other finer details about being a stockholder if you stay tuned.

How To Invest Money In The Stock Market

Putting your money in the bank as your savings account is not enough if you want it to grow. The interest rates that bank offer in an annual basis is ridiculously low that you probably would enjoy all your hard earned money by the time you already have grandkis. The best way to make your money flourish is to invest it in a profitable place like a stock market. Although it is a good idea, there are still some things that you must know regarding it before you just throw all your savings in there without completely knowing what it is in the first place.investment risks

There are risks involved (just like any other investments) and it is a must that you are prepared for some unexpected negative outcome along the way. Keep in mind that the market or pretty much any industry or company cannot be stagnant with its money flow. One day it could go up and there are days when you will see it going down and I have to tell you that when that happens, it is not the end of the world.

The first thing you must do is research for the right company or business where you want to put your money in. Don’t just read about a company, but instead do thorough research. Usually, a broker would entice you to buy a specific stock in a market, I would suggest to not buy immediately without weighing the pros and cons.

Most brokers (especially in Wall Street) are trained to hard sell that you will just find yourself buying some stocks you probably haven’t even heard of. Worst is that you might even encounter some companies that would sell some fraudulent accounts, only to find out that in the end your money went to nothing because the said account does not even exist.

Make sure to find a go-to person when it comes to this who is trustworthy enough and someone knowledgeable in the field of finance. I would also say not to place ALL your money, especially NOT ALL your savings in one stock. That is not a wise move because there is a big chance of you losing them all. There is also a chance that you might gain even more than 100% of what you gave out, but it is best to keep your expectations low because the market is always fluctuating on a daily basis.

Allow me to summarize this, research the company you want to invest in. Find a broker who would help you out through the process and before you give out your money and sign any deal, make sure that you read the terms and condition of the company and your broker’s so you won’t have problems in the end.

The stock market is a tricky place and it is very unpredictable. It is also important that you have your own decision before buying a stock. This means, you can’t just be easily influenced by the people around you.