Investing in the stock market can be a daunting task, especially for beginners. With so many options available, it’s important to understand the different types of stocks before you start investing. In this article, we’ll go over 10 types of stocks that every beginner investor should know.
The following are the types of shares:
The following are the types of shares
Common Stock
Common stock is the most basic type of stock that is available to investors. When you own common stock, you own a portion of the company and have the right to vote on company decisions. Common stock also gives you the potential to earn dividends, which are a portion of the company’s profits that are distributed to shareholders.
Preferred Stock
Preferred stock is a type of stock that gives investors priority over common stockholders in terms of receiving dividends and other payments. However, preferred stockholders generally do not have voting rights. Preferred stock is often considered to be a more stable investment than common stock, as it typically has a fixed dividend payout.
Large-cap Stock
Large-cap stocks are shares of companies that have a market capitalization of over $10 billion. These companies are typically well-established and have a proven track record of financial stability. Large-cap stocks are often considered to be a safe investment, as they are less volatile than smaller companies.
Mid-cap Stock
Mid-cap stocks are shares of companies that have a market capitalization between $2 billion and $10 billion. These companies are typically growing and expanding, but may not have the same level of stability as larger companies. Mid-cap stocks are often considered to be a good balance between risk and reward.
Small Cap Stock
Small-cap stocks are shares of companies that have a market capitalization of less than $2 billion. These companies are typically newer and may be in the early stages of growth. Small-cap stocks are often considered to be more volatile than larger companies, but they also have the potential for higher returns.
Growth Stock
Growth stocks are shares of companies that are expected to grow at a faster rate than the overall market. These companies may be in emerging industries or may be expanding rapidly. Growth stocks are often considered to be a higher risk investment, but they also have the potential for higher returns.
Value Stock
Value stocks are shares of companies that are considered to be undervalued by the market. These companies may be experiencing temporary setbacks or may be overlooked by investors. Value stocks are often considered to be a lower risk investment, as they typically have a strong financial position and a stable dividend payout.
International Stock
International stocks are shares of companies that are based outside of your home country. Investing in international stocks can provide diversification and exposure to different markets and economies. However, investing in international stocks also comes with additional risks, such as currency fluctuations and political instability.
Cyclical Stock
Cyclical stocks are shares of companies that are heavily influenced by the business cycle. These companies may perform well during periods of economic growth but may struggle during periods of economic downturn. Examples of cyclical stocks include companies in the automotive, construction, and retail industries.
Defensive Stock
Defensive stocks are shares of companies that are less affected by the business cycle. These companies may provide stable returns and consistent dividends, even during periods of economic downturn. Examples of defensive stocks include companies in the healthcare, utilities, and consumer staples industries.
Collection of Selected Stock Types Through RHB Tradesmart ID
Investing in stocks can be a complex process, but with the right tools and resources, it can also be a rewarding experience. RHB Tradesmart ID is a platform that provides investors with access to a wide range of investment products and services, including a collection of selected stock types. Let’s take a look at some of the stocks available through RHB Tradesmart ID.
One example of a large-cap stock available through RHB Tradesmart ID is Maybank, which is one of the largest banks in Malaysia. Maybank has a strong track record of financial stability and consistent dividend payouts, making it a popular choice among investors.
For mid-cap stocks, RHB Tradesmart ID offers shares in companies such as MyEG, which provides electronic services to the Malaysian government, and Top Glove, a leading manufacturer of rubber gloves. Both companies have shown strong growth potential and may provide higher returns for investors willing to take on a slightly higher level of risk.
Small-cap stocks available
Small-cap stocks available through RHB Tradesmart ID include companies such as Supermax, which is also in the rubber glove industry, and Datasonic, a provider of security solutions. These companies have shown promising growth potential but may be subject to more volatility than larger, more established companies.
For investors looking for growth stocks, RHB Tradesmart ID offers shares in companies such as AirAsia, a low-cost airline that has expanded rapidly in recent years, and Lazada, an e-commerce platform that has seen explosive growth in Southeast Asia.
Value stocks available through RHB Tradesmart ID include companies such as Tenaga Nasional, which is Malaysia’s largest utility company, and Genting Malaysia, a leading gaming and resort company. These companies may be undervalued by the market and offer attractive dividend yields.
RHB Tradesmart ID
RHB Tradesmart ID also offers international stocks, including shares in companies such as Alibaba, the Chinese e-commerce giant, and Tencent, a leading technology company in China. Investing in these international stocks can provide diversification and exposure to different markets and economies.
In conclusion, understanding the different types of stocks is crucial for beginner investors looking to enter the stock market. By learning about the various types of stocks and their characteristics, investors can make informed decisions and build a diversified portfolio that suits their investment goals and risk tolerance. RHB Tradesmart ID offers a wide range of investment options and can be a valuable resource for investors looking to start investing in the stock market.