Penny stock trading refers to buying and selling stocks of small companies that trade for less than $5. Be forewarned: Penny stocks are considered highly speculative. But with high risk comes the possibility of high reward. The Securities and Exchange Commission cautions that even the best penny stocks with high returns should be thoroughly investigated before you buy. Why does the SEC...
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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