Simply put, stocks are a great way to build serious wealth. They function much like bonds, in that you don’t get to own the whole stock until it hits a certain price, but unlike bonds, stocks usually go up and down versus the total market cap. Most people consider stocks to be an investment with a lot of risk. They’re actually a very safe investment method that’s been around for centuries, so you don’t have to worry about dying your retirement savings on one bad trade, like bonds would.
Stocks are probably the best-known and most common stock type. They’re where most people start out, buy some shares, and then wait for them to go up in value. Stocks are usually how most common stockholders invest in some of the biggest successful businesses in the world today. The most common type of ownership is 100% common stock ownership, which gives the shareholder the right to all of the equity in a company (with a break down of who owns what percentage by the law).
Private stocks fall into another category entirely, which is called preferred stock. Preferred stocks aren’t listed on the dominant exchanges like common stocks, and instead must be bought in a private brokerage account. However, because they are often held back a bit from the public, they have fewer risks and tend to have a better annual performance track record than the more traditional stocks. There are many different types of these investments, ranging from regular and long term, high risk and low risk. Whatever you choose, it’s important to make sure that you understand what type of investment is best suited for you and remember that everyone has different needs so choose the ones that fit you.