Stocks represent parts of a corporation. They are shares in a business which, though it may be publicly-held, is actually privately owned by a group of owners. You probably own one of these blocks if you bought one of those little squares. When you purchase stocks, however, you become part owner of that business! Ready to invest and debt-free? Find a smart money expert who can help you strategise.
Most people are familiar with common stocks: you own a handful of shares in a small company and that company makes money. Or you might own shares in a big company and it makes money (the big corporations are much bigger than the small ones). But did you know that there are several other types of stocks? Here are some more:
Long-term investors are risk-takers who are prepared to hold onto their stocks for a while. There are many factors that affect the value of the stock market, so it’s not possible to say with certainty that a certain stock will rise in value over time. In fact, some stocks have done incredible drops in value in recent years. It is possible for long-term investors to make a lot of money with these kinds of investments, but there are also risks involved.
Interested in ownership but not ready to dive in yet? Many stocks involve owning shares in a corporation without having to make any initial payments. These shares are known as ‘liabilities’ and ownership of these stocks is only guaranteed for as long as they continue to produce profits for the owner. These are popular with small-business owners who want to own a piece of the action without paying out cash up-front.
Finally, there are ‘asset stocks.’ These stocks are shares in publicly traded companies. This is an asset class that’s growing in popularity, especially among those who have a larger desire to have a large portion of ownership in a business. Like single stocks, there are also risks involved if you don’t know much about the industry or company behind the stock, so it’s best to start out with these kinds of holdings.
As you can see from this quick guide, there are several different options for where you can invest your money. There are both good and bad stocks and investments, so before investing you should do your research into which stock exchanges are available in your area. Then, ask a broker or financial planner about what kind of investments you should consider. They should be able to help you find the best place to put your money and make sure you get the most out of your investment returns.