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Stock is partial ownership in a corporation. When an individual purchases shares of a stock, they are purchasing ownership in that corporation, with rights to share in its’ profits. There are thousands of stocks which are divided into different categories by size, style and sector. Common and preferred are the two main forms, or classes, of stocks. However, companies also customize different classes of stock. The majority of stock issued is common stock. Common shares represent ownership in a company and dividends on a portion of the profits. Investors get one vote per share to elect board members, who oversee the company. Preferred stock also represents a certain degree of ownership in the company, but generally doesn’t come with the same voting rights. However, this varies company to company. Also, with preferred shares, investors are usually guaranteed a fixed dividend forever, unlike common stock, which has variable dividends that are not guaranteed.

Other types of stocks include:
Blue Chip Stocks: These consist of the oldest, lowest risk, most continuously profitable companies, which usually pay a dividend. Some companies are more than 100 years old.

Growth Stocks: These are stocks that have or are expected to have superior earnings. They usually don't pay dividends because they reinvest their earnings for growth, but their share price can increase dramatically while in their growth stage. Investors should be prepared for possible price fluctuations with growth stocks as they can do down dramatically with bad news or a setback. However, the long term growth can be outstanding.

No Load Stocks can be purchased for reduced or no cost directly from companies. Check the company's website to verify its participation in this program.

Speculative Stocks: These types of stocks are considered “risky.“ Chances of making a lot of money are small. Speculative stocks are stocks priced under $5 per share.


 


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