What Are Stocks And the Kinds of Stocks?

We are all well aware that the stock market is a great platform to earn money. A lot of people are considering to purchase stocks to earn more. However, a lot of people are not educated when it comes to stocks. This article here serves as a guide or a stock introduction to get you schooled with the basics of the stock market.

When purchasing stocks, you can purchase stocks from the stock market. You may also purchase it directly from the company or from the stockholder. It can be a form of initial public offering with a new stock or it can be a resale. Stocks or shares are forms of equity ownership for a part of a corporation. There are nonprofit stock organizations and also corporations made for profit.

Shares earn dividends. The amount of these dividends depend on the rate of your stocks and the earnings of the company. The more the company earns, the greater the amount of the dividends you receive.

There are also preference shares and ordinary shares in which preference shareholders are paid dividends first before the ordinary shareholders. They are on the top of the priority list for dividends. On the other hand, preference share holders do not have voting rights for the company’s board of directors. They also could not be elected.

Ordinary shares can be participating or nonparticipating. Participating shares give voting rights to shareholders. However, as the name suggests, nonparticipating ordinary shares do not give voting rights to the shareholders.

Owning stocks is great because you can resell them if you want to and if you are lucky enough to invest in a company that profits a lot, you can earn money for sure. You may earn dividends in the form of cash, property, or shares too.

In a corporation, you also do not have to worry much because you earn passive income with your stocks and you also don’t have to pay a debt if the company gets bankrupt because the corporation is a separate entity in itself.