Types Of Stocks To Buy
|
Stock market trading can be a risky business unless one has the complete information about the fundamentals of the market. Before understanding how the market operates and ensuring a wise investment, it is very important to have knowledge about different types of stocks that can be bought.
|
|
Stocks can be divided into two broad categories namely preferred stocks and common stocks. Common stocks provide the investor with a bit of ownership of the company. An investor with a common stock is entitled to receive dividends and has the right to vote while electing directors or making important business decisions. Investors with preferred stocks are entitled to receive preferential treatment at the time of paying out dividends. Preferred stocks provide security and assurance even when the company goes bankrupt.
Stocks are also categorized based on their risk factor. These categories include low-risk, mid-risk and high-risk stocks. While the penny stocks and speculative stocks are considered high-risk, stocks from banks, government sectors and some other utilities are taken as low-risk. Stocks that have a decent dividend payment history are classified under mid-risk category.
Other types of stocks include growth stocks, blue chip stocks, technology stocks and speculative stocks. Growth stocks are companies that are experiencing rapid growth and have a stable turnover rate. These companies are predicted to grow in future and are highly attractive to investors. Medical and software technology stocks come under this category. Growth stocks are expensive and considered in the high-risk category. However, you can earn a substantial amount with growth stocks. Blue chip stocks are stocks of companies that are well-established, have a long growth history, highly reputable in the market, have brand recognition and are considered leaders in their respective sectors. Blue chip stocks are highly expensive but offer steady growth and have a relatively low risk.
More Articles:
 |
