Different types of stocks and on what basis they are classified ?
A stock is a term which is used to describe the ownership certificate associated with any company. By holding stocks of a company you become eligible to claim on company’s assets and earnings. The more number of stocks you hold more is your ownership. Stock market is of highly volatile nature and keeps on fluctuating . Traders with less experience find it difficult to trade because of this. Stock Tips as suggested by experts of stock market helps traders in earning expected returns and have a better trading experience.
There are different types of stocks which are classified as follows :
On the basis of ownership
Common Stocks : As the name suggests these are the stocks which are common. By holding common stocks you can claim on companies profit i.e dividends depending upon the number of units you are holding. Investors also get other benefit like voting rights. These stocks yield high returns and have highest risk. If in case company goes bankrupt, shareholders will not get their money until all the other liabilities are cleared.
Preferred Stocks : These stocks makes investors eligible for some degree of ownership but other benefits like voting rights are not issued to them. In return preferred shares holders gets a fixed dividend every year. This makes prices of these stocks less volatile then common stock as in case of common stocks no fixed dividend is promised.
On the basis of company specifics and dividend payments
Blue-chip Stocks: These stocks belongs to the company which are operating from many years .They have lower liabilities and pay consistent dividends. Because of these features such stocks are considered to be safe. But as these companies have stable investors, they are not likely to grow much.
Income stocks : These stocks are often related to blue chip stocks as they also belong to stable companies which are capable of paying large dividends.People who are retired and looking for steady income or wants secondary source of income generally invest in such stable income companies. However they are equally risky as well when market sees downfall.
Growth Stocks : Growth stocks are stocks of those companies whose profits are appreciating rapidly. Companies like these usually reinvest their profit and pay less or no dividend. They believe growth in stocks price is enough to attract and hold more investors. Growth companies are technology centered and their stocks price grows faster then their earnings. Such stocks rise in value quickly , but they also tend to fall more quickly.
These are some types of stocks and there are many more like defensive stocks, beta stocks, cyclical stocks etc. Traders and investors depending upon their requirements select the type of stock which is best suited for them. Each stock has its own pros and cons , with good trading experience and market knowledge expected returns can be earned. Financial advisory services like trading tips, mcx tips , stock market trading tips can also be used for improving performance in the market .