Stocks, also known as equities, is a kind of security that signifies a share of ownership in the issuing company. Simply put, stocks are a way to build your wealth. It is one of the ways by which common people can invest in a major financial corporation of the world and entitles you to the part of a corporation’s earnings and assets.
The word ‘stock’ is often used as a broader categorisation for two types of stocks that are issued by the company. These are common stocks and preferred stocks. Common stock gives the investor voting rights and claims to dividend payments. Preferred stocks have no voting rights but they have preferential rights over the earnings and the assets of the corporation.