What Are the 5 Types of Stocks
Do your research and remember that _________________ for a balanced portfolio is usually a good choice.
Hi, I'm Brad Meehan and I work in the banking industry here in Kansas City. Today, I'd like to talk to you about the five different kinds of stocks for about.com. There is a common misconception that all stocks are the same, but this couldn't be further from the truth. Having a basic knowledge of the different types of stocks can be a real asset to an investor wishing to build a portfolio that is best suited for his individual needs.Let's first talk about growth stocks. These are stocks that are growing at a fast rate and doing very well compared to other stocks in the market. An investor buys these stocks on the hope that they will continue to grow and they are a great long term investment. The cons of these stocks are that they pay little to no dividends and are not great for the long term.Income stocks are stocks that pay out large amounts of dividends to shareholders. They don't have to wait to sell in order to receive dividends on a regular basis. They also tend to survive the market well because they are continuously paying out dividends, keeping investors happy. On the down side, they may eventually stop paying out dividends and they may not go up a whole lot in price before it's time to sell.There is also value stock. These are stocks that are undervalued in the market. Their value is apparent when you compare their low price to their earnings. Investors try to snatch these up before the market corrects itself and the prices rise.Blue chip stocks are another type of stock. These represent large and established companies. They pay out solid dividends, even when the market is down. And while the price of this stock sees little significant growth, they tend to follow the S&P 500, they are a great option for a retirement fund and they are less risky than other types of stocks.And finally, there are recurring stocks. These stocks go up and down with the economy. When the economy goes up or down, the recurring stock goes with it. When the economy is booing they make a great asset to your portfolio.Now, it's important to know that all investing takes some kind of risk, and a portfolio that's right for one person may not be right for another. Do your research and know that, usually, a balanced portfolio is usually a good choice. Thanks for watching, and for more information, be sure to check us out on the web at About.com.
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