Stock market investment is a fascinating field that can seem too complicated for many people. That’s understandable, because there are different types of stocks to consider and it all means something slightly different depending on the type you have!
Corporations are a huge part of all our lives. We see them on television, in the newspaper, and we get ads from them all over the place. They may seem like they have power because it is such an integral part of the society, but that’s not necessarily true-because there is one group who ultimately has control: common stockholders.
Along with common stock, there are also different classes of stock. The different classes of stock in one company are often called Class A and Class B. The first class, class A, essentially gives the stock owner more votes per share of stock than the owners of class B stock.
The ability to create different classes of stock in a corporation has existed since 1987. Many investors avoid stocks that have more than one class, and stocks that have more than one class are not called common stock.
The most upscale type of stock is preferred stocks. Preferred stocks are a mix between bonds and shares, but they come with some extra perks that you may find attractive. For starters, in the event that your company goes under or declares bankruptcy (worse case scenarios), at least we know someone will be able to claim their assets – it won’t just go up for grabs!
Alternatively, if things continue going well then these holders get preferential treatment when getting paid from profits before common shareholders do; however there’s always a catch… If ever an owner wants out of this high-risk investment venture, the company typically has first dibs on buying back our share and cutting off dividends entirely so buyer beware!