Risks of Shares

As we told before stocks are of two types:

   Common Stock<!--[endif]-->

    Preferred Stock<!--[endif]-->

Preferred stocks are safer than common stock but common stocks give more returns. If a company goes bankrupt and everything is sold or liquidated,

<!--[if !supportLists]-->Ø      First, the Creditors (or the banks/capitalists who lent the company money directly at a certain rate of interest) will get their dues back.<!--[endif]-->

<!--[if !supportLists]-->Ø      Second, the bondholders (they are persons who lend money to the company for a specific period at a specific interest rate) will their money back.<!--[endif]-->

<!--[if !supportLists]-->Ø      Third, preferred shareholders are paid their share price and dividends.<!--[endif]-->

<!--[if !supportLists]-->Ø      Fourth, Common stockholders will get money if any money is left by that time. Otherwise, it’s a complete loss!<!--[endif]-->

What we get in share markets are COMMON SHARES. Hence, associated risks are there, which you see printed in small letters on the website or the share advertisements.

Why would you take the risks? Because returns are great! You must have heard stories of people making millions in share markets! That’s what will compel you to invest!