The Pros And Cons Of Stocks

Register to read the introduction… What happens is a stock for an organization is broken or divided up into multiple shares which total the amount for when the business was formulated or a restructure for growth. At some point many companies excel and reach their goals and then will want to raise money so they can do one of many things like open another branch, expand to manufacture more product or even hire more people to keep up with the demand. In either of these directions the organization has a few options of either borrowing the money or better yet they can sell stake in the company to investors. Like explained before, when someone owns stock, then that individual is part of an owner for that company and earning a piece on every asset plus penny earned. Now with-in stocks there are two family members, common stocks and preferred stocks which is important to know. Common stocks typically allows the investor to have voting ability towards the company in corporate decisions, where preferred stocks do not give the investor the voting rights but the payment of funds to these shareholders are paid before any other shareholders. Additionally, some common stocks could be sold with no voting ability or other unique characteristics and preferred can be hybrid to having the rights of not only the preferred but also being able to have voting rights like the common. Bottom line, any investor needs to do the research on the stocks options which one might be getting involved with depending on how he or she wants to put their time into the management of such stocks. Managing stocks to success takes time and the more time an investor puts in the development of their portfolio needs to know that practice makes perfect, but most importantly people need to start somewhere and that is how to buy and …show more content…
Some stock brokers are full service where others are discount brokers, but ultimately all brokers are registered with the stock exchange which they manage the trade of a stock from a seller to a buyer. Now full service brokers usually charge the investor per trade but do also give investment advice, where discount brokers offer little advice or no advice at all plus charge less for each trade. If an investor were to search they also could find a bank or credit union that has teamed up with both of these types of brokers in hopes of making investors more confident or comfortable in purchasing. Not every investor has to go through an actual broker though. Some investors just figure it is smarter for them to deal direct with a company that is selling shares. Many companies will allow purchases to happen through their investor relations department but a lot of times the transaction will still need to be finalized through a broker. In addition there is what is called Direct Public Offerings which are sold by the actual company itself; this type of stock purchase does not involve the assistance of a broker. Once it has been decided with the purchase direction an investor is to go, then it comes down to how the purchase of the stocks is going to be financed. This can be handled two different ways be either the buyer’s money or by buying the stock on margin. Buying the stock on margin means that an investor uses money borrowed against current stocks in his or her stock account. These other stocks in the stock account guarantee that the buyer can repay the loan or the broker can sell the stocks that were used as collateral to obtain the debt. Buying on margin is very similar to buying a house or car where there also is interest involved, typically 8 –