Types Of Stock – Common vs. Preferred

The type of stock most commonly that you will see in the market is the normal stock or which is known as common stock. In fact most of the companies issue that stock only.

You would wonder why the common stock is different than the other stock known as preferred stock and why the companies issue them. As a stock market basics student you should know the difference if you want to buy the correct type of stock and earn money and this website will hopefully help you with a better understanding of the position.

What is different is the way the voting rights are issued to people and also that drives how the preferred stocks have less risk than the others. Let us say the company wants to have the voting rights restricted to a certain set of people but also wants the general public to invest in stock but does not want to give them much voting power.

Now this voting power is generally needed to get resolutions and agreements done at the Annual general body meeting or the extraordinary general body meeting. Suppose hypothetically if the entire general public ganged up against the company then you can always have the resolutions blocked and the may be have some things be approved with the people managing the company having no say in the decisions.

To avoid these kinds of situations it is required sometimes by the company to offer preference shares to certain investors who are more than likely to side by the management. These preference shares usually will carry more voting power than the general class of shares. For example preferred shares will have ten voting rights per share as opposed to common shares which will have only one vote per share.

The preference shares have a fixed dividend and they are assumed to be like a hybrid between shares and bonds. Also in the event of liquidation these stock are known to be very much like the common stock apart from the fact they will come in first to get any assets upon liquidation and then will come the common stock holders.

Classes of Stock

Several companies also offer different classes of stock which may be helpful for the voting rights differentiation as well. If you are reading a stock market ticker you would notice the class right next to the stock symbol e.g share XYZ will be marked as XYZa and XYZb or XYZ.a and XYZ.b

Tips To Help You Make The Best Investment Choices

The following is some detailed investment advice for specific areas. This can help one to get an idea of what the options are as well as give a general idea of pros, cons and risks. While this advice is based on sound investment principles, it should only be used as a starting point. Once a person has decided to invest in one or more markets, it is wise to look up detailed information on the market in question.

How to invest in stocks

Stocks are generally purchased through a broker but you can buy them on your own via either a dividend reinvestment plan or a direct stock purchase plan. However, it is usually better to buy stocks via a broker as it is less risky. Stocks represent a portion of a company. By becoming a stock holder, one will be able to vote on who will sit on the board of directors. One will then be entitled to a portion of the company’s profits.

There are various types of stocks but they generally fall into two categories: low risk stocks and high risk stocks. High risk stocks can be more profitable but there is also a high risk of losing money. It is generally wise to create an investment portfolio with a mixture of both low and high risk stocks. A wise investor will also do extensive research before buying stock in a company. Choose a company whose profits have been rising on a regular basis. Keep tabs of how the company is doing; you may need to sell the stock off at any given moment if the company seems poised to take a nosedive.

How to invest in Gold

Gold is a precious metal whose value has endured for millennia. While the price of gold fluctuates, it has always been valuable and probably always will be. Gold is a wise, safe investment to make. Choose gold coins that are known the world over; some good options include the American Eagle, South African Krugerrand and Australian and UK Sovereigns. See how much the coin weights (this is measured in either grams or troy ounces) and what the level of fineness is.


Gold coins should have a fineness level of about 917 out of 1,000. A viable alternative to buying a gold coin is to buy a bar of gold. These are sold at various stores as well as over the internet. However, it is usually better to buy gold bars in person instead of online. Make sure the seller is a reputable, honest dealer, check the weight of the bar and what its level of fineness is. Unlike gold coins, gold bars should have a fineness level of 999 out of 1,000.

How to invest in Silver

Silver can also be a good investment to make. Silver is not as expensive as gold. While the returns gained from silver investments will not be as high as gold investment returns, silver is a viable investment alternative for those who have a limited income. Silver bullion coins can be bought from a variety of sources but should always be bought in person from a reputable dealer. The most popular silver coins are the Canadian Silver Maple Leaf, American Silver Eagle, the Austrian Silver Vienna Philharmonic and the British Silver Britannia. Out of all these coins, the Canadian Silver Maple Leaf has the highest purity level at 99.99%.

The other coins mentioned above have a purity level of 99.90%. Wall Street Mint Bars and Sunshine Minting Silver Bars are also good investments. Alternatively, one can invest in antique silver items as opposed to silver coins or bullion. Antique silver items are a wise investment as the price is almost certain to rise with age. Antique silverware and ornaments can be bought via various certified antique dealers and should always come with a certificate of authenticity. Both the weight and the purity level of the silver should be written down. Note that antique items will have a lower purity level than either bullion or silver bars, as other metals must be used to shape the silver.

How to invest in Real Estate

Despite the downfall of the housing market in 2008, real estate remains a viable investment option. In fact, there is no better time than the present to invest in real estate, as both prices and interest rates are quite low. Find a state where real estate prices are steadily rising and invest in a house, apartment or condominium in such a state. If you are new to real estate investment, then hiring a real estate agent can be a good idea and is certainly worth the cost.

Real estate agents have a list of houses for sale that is not available to the general public. This list is known as the MLS and can offer some good buys. An alternative is to attend housing auctions. Houses that are foreclosed on are often put up for auction by the bank that was holding the mortgage. In many instances, the bidding starts quite low and it is possible to buy real estate at bargain prices at a real estate auction. Yet another alternative is to buy an empty lot and invest in building a house, office building or apartment complex. However, while this latter option can be quite profitable, it also requires a large expenditure of time and energy.

How to Invest in Oil

Oil can be a highly profitable investment. It is in high demand and many analysts predict the price of oil will rise in the coming years. However, investing in oil can be risky. Many investors lost a lot of money when the price of oil went down by over 75% a couple of years ago. While there are several ways to go about investing in oil, the simplest and least risky method is to purchase an oil ETF (exchange traded funds).

There are about a dozen ETFs, but some of the most commonly known ones are the US Twelve Month Oil Fund ETF, the US Short Oil Fund ETF, the DBO Power Shares DB Oil Fund, the ProShares Ultra DJ-AIG Crude Oil ETF and the ProShares UltraShort DJ-AIG Crude Oil ETF. Investing in an oil fund or directly into an oil company can also be wise; however, a first time investor will want to start off with investing in ETFs and then diversify his or her investments from there.


How to invest in Bonds

Bonds are in many ways a lower risk investment than the stock market. For this reason and other reasons, many investors opt for an investment portfolio that contains both stocks and bonds. Bonds are loans taken out by either a government or company. You are in essence loaning money to an institution; this money is then repaid with interest. Many consider this investment to be a source of fixed income. Unlike the other investments mentioned above, bonds provide a steady rate of interest.

The money generated is not subject to market conditions, how well a particular company such as Blue Sky is doing or when the bonds were purchased. However, the income that is provided is not particularly high, as the principal is not paid back for many years. Purchasing bonds is fairly straightforward, as you would not need to go through a broker. However, you should familiarize yourself with the par value (i.e. the amount of money you are loaning a company or the government), the coupon rate (aka interest rate) and the maturity rate (when the principal and interest will be paid back). These rates vary depending on which bonds were taken out.

How to invest in Mutual Funds

Mutual funds are perhaps one of the riskiest investments that one can make. You will need to start by choosing a brokerage firm and sales representative. After this, you can make an initial investment decision as to which mutual funds to invest in. Be prepared to pay annual management fees to the brokerage firm who is handling your mutual fund investment. The tax rate on mutual fund returns can be quite high, although the exact rate depends on which state you live in and your total yearly income. You can also invest in mutual funds over the internet, if you have an account with a bank that handles these types of investments.

How To Invest

No matter how large or small your salary is, it is important to learn how to invest and make some wise investments. Wise investments can help one’s money to grow exponentially and can provide one with sizable savings over time. Following are some tips on saving money and investing wisely. This is my first post in the series for Learn How to Invest


Important Things to Consider

1. Put aside a certain percentage of income every week. The importance of doing this cannot be overestimated. It is important to set aside this portion of your income as soon as it comes in. Do not wait until the end of the week to see what is left; chances are that daily expenditures and unnecessary purchases will eat up what should have gone into savings. Ten percent is a good amount to put aside in savings, although you can set aside even more if your financial situation permits. It can be a good idea to divide savings into two categories. On one hand, you will want to keep a savings account that is not touched except in an emergency situation. On the other hand, a portion of your savings account can and should be invested in order to generate more cash. Have a balance between investing and saving money. You can do either 50-50 or 60-40, as you see fit. Or perhaps set aside one month’s income towards savings and the next month’s income towards investments.

2. Make a Plan and Set Goals. Everyone should have a financial plan. The old saying “failure to plan is planning to fail” very much applies to money management. The first step is to draw up a monthly budget. Consider how much money you spend on a monthly basis for food, rent/mortgage payments, utilities, entertainment, transport and so forth. Then make a budget of how much you intend to spend each month and stick to it.

After making a plan, start setting goals. These goals should be specific, clear and quantifiable. A goal such as “I will save more money this year than last year” is way too vague. Some good examples of quantifiable goals are:

• I will set aside $500 in savings every month.

• I will cut back my entertainment budget from $200 a month to $150 a month.

• I will pay off all my high interest loans by (set a specific date).

Entrepreneurs should set goals for how much money they want to make on a weekly, monthly, quarterly and yearly basis. These goals should be posted somewhere visible. Check off your progress and see how you are doing. If your goals are unrealistic, you may need to modify them. If you are easily reaching or surpassing your goals, try to make them more challenging. Specific goals include:

• I will make $1,000 a week in gross profits.

• I will make $400 a week in net profits.

• I will cut operating costs by 10% over the next six months.


3. Start Investing. Investing money can be risky but it can also be very financially rewarding. Take the time to consider various investment options consider each one’s risk factor.

It is impossible to say when the right time to invest is across the board. You will need to consider your financial situation and see when you have sufficient money saved up. Some investments, such as the Forex market, require that a minimum amount of funds be invested. What can be said with certainty is that one should never make an investment he or she is unsure about or has not researched thoroughly.

4. Build a Nest Egg and Emergency Fund. As was noted above, anyone can save money by setting aside a percentage of income every week. There are not many valid excuses for not having emergency money and/or a nest egg.

Emergency money is cash on hand that is not tied up in investments. This money should only be used in an emergency situation. It should ideally be kept in a savings account but can also be kept at home if one has a safe.

A nest egg is not necessarily the same as emergency money. A nest egg can be assets as opposed to hard cash. Home ownership is often viewed as a nest egg; the home can either be used for retirement or sold to provide retirement income. Other nest eggs include investments such as gold, stocks and bonds. Once again, one should not invest in a nest egg without proper research. In some instances, the advice of a lawyer is needed before making certain investments.

5. Invest in the right investment books. Investment books can help you better understand your options and choose the right way or ways to invest your funds. Investment books can be bought at a local bookstore or over the internet. Following are some books that a prospective investor is sure to find helpful and informative.

• “The Little Book of Value Investing” from Christopher Browne is particularly helpful and gets good review ratings. It deals with value investing and is a good guide for those who do not have experience in making stock market investments.

• “Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor” is also a good buy. It provides good advice on portfolio management.

• “IRA Wealth: Revolutionary IRA Strategies for Real Estate Investment” is a helpful book that covers the ins and outs of investing in real estate.

• “The Boggleheads’ Guide to Investing” is yet another good investment book. Unlike the books mentioned above, it deals with a variety of investment options. It is written in an informal, almost irreverent style, making it an enjoyable read for a prospective investor of any age.

6. It helps to consider true to life examples when making investment decisions. The following examples can give you ideas of how to wisely invest your money. Billy has $1,000 to invest. He considers the various options and decides which ones (i.e. real estate) are not feasible. He then decides to diversify his money. He invests $400 in the stock market, $400 in gold and silver and $200 in oil ETFs.

He has a diversified portfolio that contains both high risk and low risk investments. If one investment does poorly, he has other investments to fall back on. Pamela, on the other hand, decides to invest $500 in gold and silver and $500 in low risk stock options. Her profits increase incrementally but are not particularly high because she has invested all her money in low risk assets. This method of investing is often considered wise, as it protects one from losing a large quantity of money. At the same time, it does not give you the opportunity to generate the profits that you could be generating.

At the other end of the extreme, we have Gary, who has invested $600 in high risk stocks and $400 in mutual funds. Gary may turn a 100% profit next month or he may lose the whole $1,000 and end up in debt. It depends not only on the exact funds and stocks he bought but also on twists and turns in these markets that are nearly impossible to predict. As you may have gathered, the first example demonstrates the best way to go about investing money, generally speaking. Pick some high risk and low risk investments; this way you will gain both profits and a certain degree of security.

What Can You Do If You Need Cash In A Hurry?

With economic conditions being as they are, the demands on household finances have never been more intense. What thins means is that there are inevitably times when we find ourselves short of cash. If that has happened to you – and the chances are it has or will do soon – what can you do to come up with some much-needed finance in short order?


We have come up with a few suggestions, some of which may be more obvious than others:

Get a loan

Not the most inspirational choice, but its certainly something worthy of consideration. You could approach your bank or building society for a short term personal loan. The only problem is that many banks are reluctant to lend these days and even if they do, they are taking quite a bit of time to reach a decision, unless you already have a preexisting overdraft facility set in place. If you are in a hurry you might not have the time to wait. Which leads to our next choice…

Opt for a payday loan

This is certainly a controversial option. Payday loans offer the advantage of being quick and easy to obtain, but against that, even with the best and most reputable payday lenders firms like Alphaloans, the interest rates are sky high and if you cannot pay the loan back at your next pay day you could end up mired in debt. We would recommend this only as a last resort and only then when you are CERTAIN you can pay the loan back at the end of the month when you are paid.

Try a pawnbrokers

Pawnbroking has come in from the dark over the last few years. They are now to be found on high streets everywhere.Basically if you have any unwanted items of jewellery or other personal possessions, you can pledge these at a pawnbroker in exchange for instant cash. Pawning unwanted goods is easy and quick, but again remember if you do not pay the loan back within the specified time you may end up losing the item or items you have pledged.

So there you have it – three simple ideas if you need to get your hands on cash quickly. Which you choose will depend on your individual preferences and circumstances.

The other side to this coin is to try to take preventative action so you don’t find yourself in a similar position in the future. Look at your outgoings to see if there are ways you can trim your costs. For instance, if you have your home cleaned by a professional service like Proclean domestic cleaning glasgow then you could opt for a less frequent visit, thereby saving money simply and quickly! Te same applies to many other domestic services.

How To Finance A Start Up Business

In spite of, or inded peehaps because of, the current uncertain economic climate, it appears that more people than ever before are attempting to start their own business, hoping that this will shield them to an extent from all the uncertainty in the current jobs market.

With any new business finance is a real issue. Today we are discussing how to go about trying to obtain a business loan with less than perfect or bad credit. If you actually go to a bank and try to get a business loan, they’re definitely going to run your personal credit. So the higher your FICO score, which the score can be from three hundred up to eight hundred and fifty, the better for your business. But what if you’re on the lower end of that score?

Oftentimes banks have a cut off point, where perhaps–and you have to check with each bank on what their requirement is–you might have to have, for example, a six hundred and forty FICO score or higher in order to apply with them. So find out in advance before they actually run your credit. I think a lot of times it’s tough for banks and financial institutions to lend to people with bad credit, so I think my number one suggestion would be just clean up your credit before you actually apply for a loan. What you can do is go to annualcreditreport.com, a website through the government to check your personal credit with each of the three bureaus, which are Trans Union, Equifax, and Experian.

Once you find your credit report, make sure you understand what’s on there. You want to make sure that you pay any collections that you’re paying on time, and that you clean up anything that may be errors. You may have to dispute it with creditors and write letters and keep very good records of that, or you may have to also dispute it with the credit bureaus and ask them to remove any information that’s not correct. So, it takes time, but I’ve seen a lot of people that have been able to improve their credit so that they have been able to go to a financial institution and obtain a loan.


Now, also, if your credit isn’t that great, there’s also a number of nonprofit organizations or even specialist niche lenders that lend money to people for businesses that you don’t need to have perfect credit. One that you might want to check out is Omnilloans.co.uk.  So perhaps you had a bankruptcy a few years ago, but you’ve been clean on your credit since then. So research into the organizations in your local area that might be providing business loans and find out exactly how flexible they are on credit, and ask them if the type of credit you have, and your issues that you had in the past, will prevent you from getting a loan from them. They also might have other ideas from you on how to come up with other funds for your business that might not necessarily be loans.

Investing For Retirement

Saving for retirement is essential – especially with the questionable future of Social Security and other government programs on both sides of the Atlantic facing serious cuts. But what is the best way to go about it?

A good start is to seek diversification in different investments, as this can prepare you for a variety of scenarios when you retire. For example, investing in both a 401K and a Roth IRA provides some protection against an unknown future tax environment. But within those accounts, what investments should you hold?

This is a tricky topic, especially as the economy continues to struggle. However, the fact remains that investing for growth is essential, especially if you are many years away from retiring. One promising option is to invest in international funds.

Benefits of International Investing

1. High Yield

Many international funds pay higher dividends than U.S. domestics. For example, the average dividend yield for blue-chip stocks in Europe and Asia is right around 3%, which is well above the current 2% yield on the S&P 500. There are also multiple high-yield international ETFs generating more than 10%.

2. Diversification

International investing is roughly broken down into 2 categories: developed markets and emerging markets. Developed markets generally carry less risk than emerging, though emerging markets may offer more opportunity for growth.

You can invest in stocks and bonds in either category in a range of sectors and countries. Moreover, international markets do not always move in tandem with U.S. markets. In other words, when your domestic funds are down, your international holdings could be up. This provides yet a further layer of diversification to portfolios that incorporate both U.S. and international funds.

3. A Weak Dollar

The dollar didn’t just weaken recently – it has under-performd for years now. If the trend continues, gains you take overseas will have more buying power domestically. That said, there are plenty of foreign countries experiencing their own financial woes these days. So do your homework to find countries with a strong currency now and the economics to keep it that way.

4. Growing Market Competition

The trend towards globalization means that the rest of the world is gaining an edge over the U.S. in various industries. For example, a cheaper labor force can allow U.S. competitors room to grow, especially when products or services are exported worldwide. As evidenced by plenty of domestic corporations expanding their overseas presence, it’s becoming harder for companies operating solely out of the United States to remain competitive.

Drawbacks to International Investing

Though the benefits are compelling, keep in mind that investing internationally comes with risks typically not associated with domestic funds.

1. Currency Risk

Fluctuations in local and foreign currencies can also work against you. If the dollar rises and foreign currencies decline, your international gains will suffer proportionately when converted to U.S. currency.

2. Foreign Unrest and Regulations

Your overseas investments can also be vulnerable to volatile politics and foreign economies. For example, a new regime could undo generous business legislation that the previous regime enacted, which could have a detrimental effect on your investments. Generally, less stable countries and economies will be more susceptible to market fluctuations as a result of political and social uprisings.

3. Lack of Familiarity and Information

If you decide to invest internationally, you will likely be unfamiliar with the companies in which you’re invested – especially since funds invest in multiple companies. This lack of information limits your ability to make fully informed decisions regarding those companies’ prospects. Moreover, corporate financial statements may be more susceptible to “loose” accounting, particularly in countries without established and independent oversight committees.

4. Higher Expense Ratios

The expense ratios on international ETFs are relatively high compared to their domestic counterparts. Expenses including the expense ratio and any sales charges should always be considered before investing, as these seriously deteriorate gains during the years you’ll be invested.

Final Thoughts

Opportunity awaits internationally. Globalisation is real and this is no longer the same world our parents invested in. That said, plenty of risk still exists as well, which is why it’s wise to allocate only a percentage of your portfolio to international funds. That percentage will depend heavily on what you’re investing for, the length of time you plan to invest, and your tolerance for investment risk.

If you have many years until retirement, you can better withstand the risk of investing in an emerging markets fund than someone just entering retirement. Plus, you’ll probably need the aggressive growth factor. International funds may also provide some protection against an ailing domestic economy.

What are your thoughts on investing in international funds?

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