STOCKS

Not Stalks… By Mande, Amber, and Amanda

Income Stock One purchased primarily for income and is paid out in the form of dividends. Pros: Can supplement budget and provide more capital to invest and are not high-risk stocks. Cons: You will owe income tax on the dividends you receive and the reward from these stocks isn’t as high as other stocks. Our Opinion: Since an income stock doesn’t provide high rewards, and those received are taxed, it’s probably not worth the effort of investing.

Growth Stock Shares in a company whose earnings are expected to grow at an above-average rate relative to the market. The stock pays few or no dividends. Pros: These stocks offer more rewards and their potential for growth is greater than other types of stock. Cons: The risk of growth stocks is also greater, and dividends are usually put back into the company; therefore, payoff comes after selling the stock. Our Opinion: While growth stocks offer higher rewards, the only way to obtain those rewards is to sell, which isn’t a very good investment.

Common Stock A form of a stock in which the holder is a voting owner in the company. For every share of stock owned, they receive one vote (Can be used to elect company’s board of directors, for example). Pros: Has the potential for high gains and the stock is very liquid. Cons: Common stocks can be unstable and stock prices can change for no reason. Our Opinion:Common stocks seem to be a good investment and they give you a say in the company.

Preferred Stock Shares in a company that are ranked higher than growth stocks, and are negotiated between the investor and the corporation. Pros: Holders receive dividends before the owners of common stock. Also, if a company goes out of business, preferred stock owners get their investments before common stockholders. Cons:They sometimes have a lower than expected reward. Our Opinion: Preferred stocks are the better investment because they offer the lowest risk and have higher priority than other stocks.