NEW YORK TheStreet -- When you step into the investing jungle, what will you find there? Lions stocks and tigers bonds and bears cashfor sure. But they're not as scary as you think. These three are the main investment classes, but the one we'll be tracking exclusively in this guide is the king of the jungle: You may have heard stocks referred to as equities or securities. The reason they're called equities is that you purchase an equity, or ownership, share of a company. Stock is also called a security for options same reason, because you're securing a share of ownership in the company. That's right; you'll be a common owner just like you've always dreamed! But, as common know from everyday life, there are terrifically run businesses and there are businesses that make you say, "I'll never go back there again! That's what this guided tour will be teaching you. So when you stock stock, you become part owner of the company -- maybe only a very small part, but still an owner. The size of the part you own, by the way, is irrelevant to your personal stock. We won't cover bonds in this guide, but it's important for you to know that they're out there in the investing jungle. When you buy a bond, you don't become part owner of a company -- you're the bank! You lend the company, or others, money. When companies, counties, municipalities or the U. Bonds are loans, with a maturity date, and a percentage rate, promised to you, the Bank of I. The maturity date and set percentage rates can make bonds an attractive investment as part of a stabilizing influence in your investment portfolio. But stock don't want just bonds in your portfolio -- over the long haul, stocks outperform bonds. If you want to purchase and own bonds, it's very important to have quality bonds in your portfolio. If you want to continue to learn about bonds, see "Why Buy Bonds? When financial advisers suggest you diversify, or vary your investments, they're advising you to spread out any potential risk, or decline, in your investment stock. Your investment portfolio is a collection of all of your investments, which could include assets from each of these three classes. It's like a nutritionist telling you to eat a little bit of each type of food to maximize your health. Stock balance of green vegetables, lean meats, dairy products and whole grain breads keep you physically and mentally healthy. Likewise, you want to invest your money in a variety of assets in your portfolio: Cash investments include products such as certificates of deposit CDs and money market mutual funds explained keep you financially healthy. These 10 stocks yield more than a year Treasury bond and are common 'buy' from TheStreet Ratings. How to Align Your Portfolio for the Fed's Taper It's like a nutritionist telling you to eat a little bit of each type of food to maximize your health. Get out your compass. Stock Types and Their Differences Explained - Pg. Wow, our jeep just rounded a clearing, and there they are -- a pride of lions explained. It's interesting -- there seem to be two really different types. The two types of lions we're looking at are preferred stocks and common stocks. Remember, regardless of which type of stock you buy, purchasing stock explained you a part owner, or shareholder, of a company. Let's Begin With Preferred Stock. Companies that sell preferred stock are actually offering a blend of a more aggressive investment stock and a more conservative one bond. This combination means that the price of preferred stock does not fluctuate as much as the price of common stock. That's why many risk-averse investors favor preferred stock. Another advantage to owning preferred stock is that it almost always pays a dividend to shareholders. Companies pay dividends to preferred stock shareholders before they pay dividends to common-stock shareholders. Dividends accumulate if the company's board of directors decides to put a freeze on divvying up profits because it doesn't have the financial resources. If the company goes bankrupt, preferred stockholders have a claim to any assets ahead of common stockholders. On the other hand, preferred stockholders don't have any voting rights. To many investors, this doesn't really matter, but if, as an owner, you are passionate about management decisions at the company, you may want the right to vote. If so, then preferred stock is not for you. High-Fee k s Eliminiate the Tax Benefits for Young Investors, Yale Prof Says Now Let's Talk About Common Stock. Common stock represents an equity ownership in the company and entitles shareholders the options to vote on management issues at the annual shareholder's meeting. Common options may, or may not, receive dividends, depending on management's decision about distributing profits. Many beginning investors believe that preferred stock is better than common stock, but that's not necessarily the case. Your decision to purchase one over the other depends upon common financial goals, your tolerance for risk, and your interest in voting rights in the company. Because most investors are interested in price appreciation, they usually purchase common stock. That's why we wrote this guide. A little later, we'll begin to learn about specific kinds of stocks that are best for you, such as growth-producing or income-producing. Right now, though, you're ready to step a little further along the trail. What We'll See as Downton Abbey Heads into the Crash ","isFirstPage": There options two ways to earn money when you invest in stock: If the company you invest in does well and makes money, its stock becomes attractive to own, and soon more investors will want to own some of the company that you own. That's when explained and demand works in your favor. The greater the demand, the more the price is driven up. The price moving up because more people are buying the stock is known as price appreciation -- your stock increases in value. You'll realize a profit, or gain, when you sell stock that has appreciated. The flip side of that is price depreciation, which is another way of saying that the price of a stock went down. In addition to the potential price appreciation, or attractiveness, of your stock in the public's eye, you can also earn a dividend when you own stock. Distributing dividend payments is another way for a company to share its profit with you. This means that each quarter the company pays you a certain amount of money for each share of stock you own. Usually dividend payments are much smaller than the price of the stock. Many times, dividends come at the expense of greater price appreciation, because the company is options its profits to shareholders rather than reinvesting these profits back into the growth of the company. However, companies that pay dividends can be very attractive to investors, because they offer a steady stream of income. Whichever you pick -- current income dividends or longer-term growth price appreciation -- as your priority depends on what you need. Stock Types and Their Differences Explained","contentType": Stock Types and Their Differences Explained","smallThumbUrl": Stock Types and Their Differences Explained","url": Action Alerts PLUS is a registered trademark of TheStreet, Inc. You are using an outdated browser. Please upgrade your browser to improve your experience. Jim Cramer's Best Stocks for Most Recent Trade Alert. Subscribe Access insights and guidance from our Wall Street pros. Find the product that's right for you. Stock Types and Their Differences Explained TheStreet Ratings Staff. Apr 28, 3: How to Align Your Portfolio for the Fed's Taper. Prev 0 of 3 Next. Sep 30, Sep 13, 1: Sep 12, 1: What They Export, Whom They Employ. Apple Drives Dow to a New Record, Amazon at All-Time Highs. McDonald's Joins 5 Other Mega Brands In Ditching the Explained. Walgreens, Rite Aid Deal Saga Is Headed Into Its Final Hours. Apple's Stock Will Treat You Just Fine If You Remember This One Golden Rule, Jim Cramer Reveals. Home Cramer Banking Biotech ETFs Futures Opinion Personal Finance Retail Tech Video. Featured Topics Jim Cramer Mad Money Stock Market Today Dow Jones Today Dividend Stocks Gold Price Silver Prices Copper Prices Oil Prices Sections. Popular Pages Best Stocks Best Stocks to Buy High Dividend Common Stock Market Holidays Earnings Calendar Ex Dividend Date ETF Ratings Mutual Fund Ratings Best Online Brokers. 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Call Options & Put Options Explained Simply In 8 Minutes (How To Trade Options For Beginners)
Call Options & Put Options Explained Simply In 8 Minutes (How To Trade Options For Beginners)
Today companies are trying to produce bulbs that are more effective and last longer.
Arthur Tindal Hopwood (GB), in 1931, discovered the fossils of three hominids near Lake Victoria, Africa.