Consumers
Students
Stocks are issued by corporations where the investor becomes a partial owner of the corporation by buying shares (also called stocks) of the company. There are two main categories of stocks: "common" and "preferred." These are described in more detail below. Stocks are traded on stock exchanges, or over-the-counter markets. Share prices and returns on stocks fluctuate with the market, and there is no guarantee of income.
Common Shares / Stock
With common shares, investors typically have voting rights
Common shares are usually purchased for potential capital appreciation
If the company makes money, investors share in the profits; if the company suffers a poor year or the markets decline, their share values may fall and dividends are unlikely
Blue Chip Stocks are typically stocks of large, stable and actively traded companies with a record of regular dividend payments
Penny Stocks are low-cost common shares (typically under $1), usually purchased for speculative purposes and issued by start-up or unproven corporations seeking capital for expansion
Small-, Mid- and Large-Cap Stocks are the results of corporations of all sizes issuing common shares to raise money; generally, the smaller the corporation, the higher the risk
Preferred Shares / Stock
Are regarded as bond-like investments
Normally purchased by investors who want a steady stream of dividends, rather than capital appreciation
Pay a dividend that is higher-yielding than common shares
Value and share price influenced more by interest-rate trends than by company's earnings
Don't typically give voting rights
They are preferred because you get a preferential claim to the assets/profits ahead of common shareholders
Precious Metals
Gold, silver and other precious metals
Held in form of bullion (the actual metal) or certificates of ownership
Commodities
Bulk goods such as grains, metals, oil and foods
Traded on commodities exchanges.
Derivatives
A security whose value depends on the market value of something else, such as a stock or commodity
They are complex investments used by sophisticated investors for speculative purposes or to help manage risk (as a hedge against changing market conditions)
"Options" and "futures" are examples of derivatives; an option gives the investor the right to buy or sell a specific security at a given price before a specified date; a futures contract obligates the investor to buy or sell a specified amount of an asset at a set price on a certain date
