Learn How to Build Wealth Volume 2–Equities and Stocks
The equity asset class includes stocks or shares in a company. One way for a company to raise money is by selling part of its “stock” or ownership to investors. This stock of the company is then divided into shares or units. By purchasing shares we become owners in the company. As owners we become shareholders and get to share in the future profit of the company.
The stock market is one of the places where sellers and buyers meet to exchange shares of companies at a predetermined set price. Buying and selling stocks is one of the fastest ways to grow and build wealth.
There are two types of stocks we can purchase; common stocks and preferred stocks. Common stocks are the most frequently held type of stocks, that are owned by investors, and these stocks give them voting rights within the company. While preferred stocks holders are not given voting rights in the company, they are given dividends (or periodic cash payments) instead.