Investing should be part of a lifestyle. Besides, there are many investment instruments. It can be in gold, deposits, and stocks. Well, this time what was discussed was investing in stocks. Maybe it’s still common, what is stock? The impression is that shares are rich people. Even though anyone can really invest in shares. Provided you know the news, the ins and outs.
Indeed, there are still many who are confused about the understanding of stocks and types. At first glance, it is known that shares can provide multiplied profits and vice versa large losses.
Some say playing stocks is almost similar to gambling because it is full of uncertainty. This assumption needs to be clarified first. In fact, all efforts always produce two sides, namely profit and loss. For starters, here are two stock categories.
1. Common stock
Common stock is securities that serve as proof of ownership of a company. These shareholders are entitled to receive a portion of the income (dividends) from the company and are willing to bear the risk of losses suffered by the company. Those who own company shares have the right to take part in managing the company. The size of this management right depends on the number of shares held. When the company profits, those who have a large percentage of shares will receive a large portion of the profits. Conversely, they are also prepared to suffer losses if the company fails to earn revenue.
2. Preferred stock
Preferred shares are securities that prove the owner has more rights than ordinary shareholders. These shareholders are entitled to be preceded when the distribution of company profits (dividends). It also continues to be the first in terms of repayment of paid-in capital if the company is liquidated. Finally, he has the right to exchange with ordinary shares. The preference shares seem better than ordinary shares. Though not so. Preferred stock is not better, but only different from ordinary shares. In fact, the best way to view preferred stocks is to relinquish the right to own a company in order to obtain protection like a creditor.