Stock Trading: 5 Types of Stocks You Need to Understand

Basically, there are two groups of stocks, preferred stocks and ordinary stocks. Preferred stocks are comparable to bonds because their returns are fixed. Preferred shareholders get the first benefits from dividends in good times and from assets if, by chance, the company goes under. In other words, the risk of a preferred shareholder is limited, they are primarily interested in dividends. Very few companies issue preferred shares.

When investors talk about investing in stocks, they are referring to ordinary stocks. The vast majority of investors are in this class, common shareholders take a small dimension of risk compared to preferred shareholders, although common shareholders have more voting power at annual general meetings.

The five types of shares under discussion are included in ordinary shares. Understanding these stocks will greatly improve your stock trading perspective. I don’t know your goal when it comes to investing, one thing I do know, however, is that you will be able to find one of the five stocks that suits your goal and temperament.

GROWTH SHARES: These are stocks with great growth potential, they grow faster than the economy and, sometimes, the stock market itself most of the time. The level of risk is minimal; Investors are attracted because they have good long-term earnings growth. Investors in this stock know that in the long term their portfolio is insured.

INCOME SHARES: Investors who buy these types of shares do so because they distribute a large part of their profits. Income stocks pay 60% to 80% to investors as dividends compared to other stocks. Income stocks are almost immune to changes in the market because investors are confident that they will receive dividends.

BLUE CHIPS ACTIONS: Derived from the game of poker, blue chips usually have the highest value. They are industry or sector leaders. They are great companies that have been around for a long time, they have solid foundations. They pay constant dividends and, most of the time, the bonus script. Although their prices do not grow much, they are good options for retirement portfolios; they are best suited for the long term.

VALUE SHARES: These are low-priced stocks that have great growth potential; Look at it this way, value stocks are selling for below their true value, which makes them very attractive. If you compare the low price of value stocks to their earnings, you will understand why stock traders are attracted to them. They are good options for investors interested in growing their portfolio.

RECURRING ACTIONS: These are actions whose returns are affected by the ups and downs of the economy. When the economy goes up or down, a recurring action responds in the same way. Its performance depends on the dictates of the economy; therefore, the best time to invest in recurring stocks is when the economy is performing well.

Ultimately, your investment options come down to you knowing what your goals are in the first place, that way you can keep a combination of these stocks in your portfolio for the purpose of balance.

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