Types of Stocks that Beginner Investors Must Know

Do you want to start trading Stocks? Check out the following types of stocks that investors must know before plunging into the following stocks.

Types of Stocks Investors Need to Understand

With the development of the era, a lot of trading can be done by the community even from home. Starting from Forex Trading, Binary Options Trading, Crypto Trading or Stock Trading.

Currently, stocks are trending in all circles. Where the understanding of the stock itself is a securities that states that you are part of the ownership of a company.

When you own shares, you can also be referred to as the owner or owner of the company, depending on how big and how many portions you have.

In short, when someone decides and has bought shares, generally that person owns part of the ownership of the company that he has purchased.

If the company has good performance, then you will benefit from the increase in the share price (Capital gain) that has been purchased.

Then, when the company is profitable, you will also get a profit every year this is part of the profits that the company provides to shareholders.

Stock Types

Here are some types of stocks that investors need to understand before jumping into stock trading.

Types of Shares Based on Ability in Claims

There are two types of shares when viewed from their ability to claim rights or claim rights, namely ordinary shares and preferred shares.

1. Common Stocks

The definition of common stock is a share in which the owner is placed in a junior position to share profits on the assets of a company.

When the liquidation procedure is carried out, the holders and owners of these common shares will have final authority in the distribution of profits from the sale of company assets.

These shareholders have limited movement and liability. Although it is limited, it has the advantage that when the company goes bankrupt, these shareholders will only bear the amount of the investment that has been deposited.

2. Preferred Stocks

Preferred stock or preferred stock is a stock whose profit sharing value is fixed. When a company suffers a loss, preferred shareholders will be allowed to have top priority in terms of sharing the proceeds from the sale of a company’s assets.

It can be said that preferred stock is similar to bonds, where there is a collection right in a profit and an asset that arose in the past.

In addition, the owner of these preferred shares will have more rights than the owner’s rights of ordinary shares.

Types of Stocks Based on Trading Performance

1. Blue Chip Stocks

The definition of blue chip stocks or often called blue chips is that they come from a large company that has a high reputation and can be trusted by business people.

This stock has a price per share that can be said to be quite high, but it has a stable value and is consistent in paying dividends.

2. Income Stocks

Income stocks or often referred to as income stocks are a type of stock that can provide great returns, but comes with a large risk as well. So it takes a good and effective strategy in running this type of stock.

The advantages that make it attractive are the ability to pay higher profits than the average dividend of the previous year. With this ability, it becomes the attraction of other investors.

3. Growth Stocks

Growth stocks or developing stocks are stocks that develop and increase faster than other types of stocks. In just one day, this type of stock can increase or decrease several times.

The types of shares are divided into 2, namely well known and lesser known.

Well known, this can be said to be exactly the same as blue chips, where this type of stock has a fairly high revenue growth and reputation.

Then for those who are lesser known, even though they are not said to be high-ranking officials in the industry, it’s just that this type of stock has special characteristics for its growth stock. Generally, this type of stock comes from regional companies that are less popular among issuers.

4. Speculative Stocks

Speculative stocks are a type of common stock that is often traded on the stock exchange because it contains the potential for large profits in the future.

Well, this is perfect for investors who like a high risk risk profile. Indeed, this type of stock has great potential to generate high dividends in the future.