Types of Stocks
There are two basic types of stocks – common and preferred. Common stock is the most commonly purchased stock. Preferred stock, however, offers some extra benefits.
Common stock gives you partial ownership in the company and entitlement to a percentage of their profits. You get the right to vote for members of the board. Common stock usually brings in the most profit over time. However, common stock also comes with a high risk because if the company fails then you lose all your investment.
Preferred Stock also offers you a part in ownership of the company. You do not usually get voting rights. You do get a guarantee dividend that is set. You also have less risk if the company fails because you are one of the first paid off during liquidation.
Besides these two different types of stock, you also have stocks with different classes. The different classes of stock represent the different voting rights attached to that stock.