Types of Stocks

Mainly there are two types of stocks

1. Common Stocks

Common stocks are the type we generally refer in everyday usage. They are stocks that come with:

<!--[if !supportLists]-->Ø      <!--[endif]-->Ownership

<!--[if !supportLists]-->Ø      <!--[endif]-->Dividends, if the company wishes to give

<!--[if !supportLists]-->Ø      <!--[endif]-->Voting rights – one vote per share

In the long run, common stocks give the maximum return if the company grows (Capital Growth). They also have certain risks which we’ll discuss in the risks section.

2. Preferred Stocks

They have

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<!--[if !supportLists]-->Ø      <!--[endif]-->Guaranteed fixed amount as dividends.

But, no voting rights.

Now who cares for voting rights? Can as a Microsoft shareholder, I will be able to vote Bill Gates out? No! Preferred shares are more preferred because they have lesser risks than common shares. Again, I’ll discuss the same in the risks of the share market.