What had been gathered here are the pros and cons of the different types of stocks in the stock market where you can invest your cash and find success in stocks.
Penny Stocks
Those listed companies with share price that is less that $1 is known as a penny stock. Many of these companies are new start-ups and do not have any great earning history yet. Stock analyst does not like to cover them in their reports and that is why they offer a chance for high returns. The good ones can make you thousands percent of profits but the bad ones can make your investment cash become zero value.
Dividend Stocks
Income stocks or dividend stocks offer investors a chance to earn a steady stream of passive income. These companies paying dividends are usually very established and their earnings are rather steady. Dividend paying companies are usually large in size and they are willing to share their profits with their shareholders in the form of dividends. I am also keen dividend investors as I love to see a stream of money entering my account every now and then for each of the dividend stocks that I have invested. Giving dividends stocks five likes.
Blue Chips Stocks
Shares of major companies are known as blue chips as they are usually huge corporations that have business operations around globally. Examples of these international companies are Apple, Google, Coca-cola, McDonalds and Toyota where their brands are well-known no matter where you lived in. With blue chips stocks, you can buy and hold it long-term like Warren Buffet.
Growth Stocks
Companies that are focus on business expansion are known as growth stocks. Their business strategy is growth and this will result in your stocks appreciating in price if the company management have done their job well. They believe that their revenues should be re-invested back into the business for further growth and that is why they hardly declared any dividends for their shareholders.
Defensive Stocks
Companies that businesses are resistant against financial crises are known as defensive stocks. They are operating in industries such as food or public utilities as everyone still need to eat and require water or electricity no matter how bad the economy is.
Cyclical Stocks
Companies that operate in industries that can boom or doom are known as cyclical stocks. The oil industries are one great example. When oil price falls, the share prices of companies dealing with oils extraction will falls while those companies that consume lots of oil will see their revenues rising.
Conclusion
As an investor, we have to understand the different types of stocks in the stock market and invest our cash according to our risk level. If we prefer steady income, then we should only invest more in dividends paying stock and less in penny or growth stocks. Every investor has their own financial goals and we should determine what kind of risks and returns that is acceptable to us by first gaining the necessary investment knowledge.
