What are stocks? Ownership & types of shares
Learn what a stock is, how it gives you ownership in a company, and the difference between common and preferred shares.
When you buy a stock, you are buying a piece of ownership in a company.
That means you may benefit if the company grows and does well, but you also share in its risks.
Key points:
Stocks are often called shares or equities. They give you a claim on part of the company’s assets and earnings.
There are different types of shares. For example:
Common shares: usually provide voting rights and possible dividend payments.
Preferred shares: often don’t carry voting rights but have priority for dividends and in case of company liquidation.
Within share types, companies often create classes (like Class A, Class B) with different voting rights or dividend structures.
Why it matters: Knowing what you own helps you understand your rights (voting, dividends), how your investment behaves, and how risk is shared between you and other owners.
Bottom line:
If you own a stock, you’re a part-owner, and that ownership comes with both opportunity and responsibility. Understanding share types helps you choose investments aligned with your goals.