3. Investments. Common Stock
Last week in the investment series, we covered investing in Collectibles. We’ve been talking quite a lot about types of investments other than the stock market in an attempt to expand your horizons about just what it is that investment means. In doing so, it is our hope that you’ll come away with an increased awareness of how to successfully invest to your full potential.
Common Stock
However, in this entry, it’s worthwhile to take a look at the topic that brought us here in the first place: common stock. As most of us already know, common stock is a great way to invest money, and is far and away one of the most popular choices for both amateur and professional investors alike.
When you buy common stock, you’re essentially buying a small piece of a publicly traded company. As such, you’re entitled to a portion of the profits that are generated by that company, which is where the real value of the stock lies.
Why Is Common Stock Popular
The reason why common stock is so popular to so many probably lies in its careful balance between risk and return. For example, investing in common stock typically yields very high returns in the area of 11 to 12% a year. There is always the possibility that a company could go bankrupt and you would lose most all of the money that you had invested, but this is rare. Furthermore, while the most common return is the very good 12%, there is always the possibility of a company skyrocketing and providing returns well above that. In a sense, this is what most investors hope for: to make that one good investment in a company that takes off and makes them rich.
Another reason for the popularity of common stock is that it is very easy to buy and sell. There are hundreds of brokers out there, and while their areas of specialty do differ, common stock is something that is handled by nearly all of them.
I hope you have enjoyed this weeks post on Common Stock, it’s now time for me to head back to the bar for a cool drink, as I am on holiday in Port Vila, Vanuatu with my family and some good friends…Life is tough!!
See you next week for part 4 of Investments.
Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2009
Tags: Common Stock, company, Investment, market, money, stocks
November 13th, 2009 at 1:07 am
Hey I am doing a project on common stock at school anymore posts you have would be nice to look at. Great information on this one.
November 25th, 2009 at 3:03 pm
Glad you enjoyed it Chris, good luck with your project mate!
Regards - Sean