There are several different types of stock that you can invest in and this sometimes causes confusion to many a first time stock market investor. You don’t want this confusion to stop you from taking advantage of the investment opportunities that the stock market offers. Let’s look at the different kinds of stock that are available for you to invest in.

Common Stock is the most common type of stock you can invest in. Common stock means that you own part of the company. As the company earns money the value of the stock will increase but if the company doesn’t do well you will lose money. Common stock holders do not participate in the day-to-day operation of a company. These stockholders to vote on the board of directors for a company.

There are also classes of stock usually referred to as Class A and Class B. Class A stock gives the stockholder more votes per share than owners of Class B stock.

Preferred stock is a combination of a stock and a bond. A preferred stock holder may lay claim to a portion of the company’s assets in the case of bankruptcy. Also a preferred stock holder will typically receive a higher dividend than other stockholders. Companies may, however, buy this stock back from the holder at any time, unlike common stock.