Before detailing into how to make money with
stock let us look into types of stocks. Stocks are of two types, they are
common stocks and preferred stocks.
Common stocks : represent
a form of equity and securities that show an ownership in a cooperation,
common stockholders has a voting right to elect the company board of directors,
in the event of liquidity of a company ,
bondholders, debt-holder, preferred
stockholders are settled first before common stockholders. They are stocks that everyone in the market
can buy; most people refer to this type of stock when they talk about stocks.
Common stocks represent ownership in a company, dividends and a vote per share
right to each shareholder. In the long run, common stocks yield maximum profits
as a result of capital growth.
The second type of the
stock is the preferred stocks; preferred stockholders has higher claim on the
ownership than common stockholders, preferred stocks has this advantage over
common stock because dividends are paid and are guaranteed unlike common stocks
where dividends are not guaranteed and are mostly paid out after when preferred
stockholders are paid, though this typed of stocks has no voting right,
preferred stock are stocks with fixed dividends and potential appreciation.
In to make money with stocks
there are steps you need to takes, below are some of the steps:
·
Conduct
research before buying stocks: avoid
buying the wrong shares by conducting research before buying the shares,
because the worst share is the wrong shares,
Before buying any shares look into the following to
prevent buying a stale stock.
·
Look at
composition of the board of directors or management team of the company you
want to buy to buy their shares. Whether the share is in the secondary or still
in the primary market, ensures that they are tested and trusted, also check the
stability of the board of directors and the management team for the past five
years. It is advisable to buy from company that has their management team tested
and trust or are known to be successful in the pass.
·
Look in
to the track record: check the
record of the company you intends to buy the shares from, find out the
financial performance, and the investor’s interest in the past years. Have they been fulfilling their promises a good
company will always be exceeding its financial projection.
·
Look in
their dividends policy: check their
dividends and bonus issuance policy, if they have being doing or not, if it is
every year or two years then it is good to buy.
·
Look into
their institutional investors: look into the insurance companies, and fund
manager and other institutional investors that buy their stocks, these
companies has effective research tools and the market more than you can do if
these companies can decides to do business with them then fine , you can go on
to do buy their stocks.
·
Contact a stock broker. You need stockbroker
to start stock business. The
stockbroker act as a platform through which you buy and sell shares.
·
Buy into private placements and initial public
offers.
