Do you know what types of stock there are in the market? There are different types of stock that come with unique privileges, varying levels of risk, income and growth potential
To help you understand the different stocks out there and how they are categorized, I created this infographic.
We’ll look at why some stocks appeal to different types of investors and why some are riskier than others.
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Of the two types of stock, common and preferred, most stocks are common. Based on their market cap, maturity and earnings, some are more appealing to either growth or value investors.
Small cap companies with a great deal of growth potential appeal to investors who profit by the appreciation in price as the company progresses.
Large cap or “blue chip” stocks are more stable and are likely to pay investors dividend income.
Most advisors suggest a balance of small cap and value stock investment to capture price appreciation while hedging this risk with stable, income paying large cap stocks.