Types of Stocks: Common

In the stock market there are two main types of stocks. The common and the preferred stocks. The common stocks are the basic stocks. When someone mentions stocks this is most likely what they’re are talking about. Preferred stocks represent a percentage of ownership in the company, but no voting rights. In this post, we’ll be focusing on common stocks. Common stocks make up the majority of the stock market. When you invest in a common share you get ownership of a small portion of the company and a claim on a portion of the company’s profits. The investors of a common stock get one vote per share to elect a board member who oversees management decisions. In long-term common shares yield higher value, but come at the cost of a higher risk. However, if a company were to go bankrupt and liquidate, it will send money to creditors, bondholders, and preferred shareholders before the common shareholders.

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