Investing in stocks and shares is the most common way for beginners to gain investment experience, and the cornerstone of many portfolios.
In simple terms, investing means putting aside money, having that money work for you, and then potentially acquiring a nice pay out in the future.
Investing your money today can mean a better tomorrow for you and your family.
The ‘trick’ is to increase your returns while decreasing your costs. Sounds simple, but there are a few things you need to know before taking the plunge.
Trading on the stock market has the potential to generate a better return than a savings account. However, it is well worth to remember that if you choose to invest your money, it will always come with the risk of loss. There is no guarantee that you will end up with a profit.
By doing so, you can achieve certain benefits, which might include the right to vote during shareholder meetings, receive a share of the company’s profits (called a dividend), and an increase in the value of your shares if the company’s stock price goes up… of course the opposite applies if the price of the stock goes down.
As a stockholder, you will own shares of a company, but you usually will not have any direct control over a company’s day-to-day operations, so this does not mean that you can march into the company’s headquarters and demand a top-floor office complete with enormous desk and personal assistant, or that you are automatically entitled to company discounts and the like.
Those who invest in Common Stock can vote at shareholders’ meetings, have a more direct involvement in the company and receive dividends at regular intervals.
On the other hand, those who invest in Preferred Stock do not have voting rights, but they receive dividend payments ahead of common stockholders. They are also given priority over common stockholders if the company goes bankrupt.
