Blue chip stocks are the foundation of investment portfolios far and wide for good reasons. The first is familiarity — many blue chips are household names. Investors are drawn to the so-called blue chips because they are the biggest companies in the world. Their market caps are measured in billions, hundreds of billions or even...
A stock is a security that gives buyers partial ownership of a company, distributed in the form of a share. If the company does well and stocks go up, buyers can sell their shares of stock for a profit. On the flip side, if the company does poorly, stock prices will go down and buyers will lose money on their investment.
The two main types of stock are common stock and preferred stock. Common stock is what most people are referring to when they discuss stocks; if you purchase common stock, you own a portion of the company and receive dividends on the company’s profits. The main difference between preferred stock and common stock is that preferred stockholders usually receive a guaranteed, fixed dividend, whereas common stockholders receive dividends based on the company’s profits.
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