Investing in equity securities (stocks) can help you attain a more diversified investment portfolio. Ocean Financial Services can assist you by providing a vast selection of domestic as well as international common and preferred stocks to choose from.
Stocks are investments that represent ownership (or equity) in a corporation. When you buy stock, you have an ownership share, however small, in that corporation and are entitled to part of that corporation’s earnings and assets. Stock investors, called shareholders or stockholders, make money when the stock increases in value or when the company that issued the stock pays dividends, or a portion of its profits, to its shareholders.
There are two main types of stock investments, common and preferred. With common stock, you own shares directly in a company and benefit when the company grows and makes a profit. With preferred stock, you generally take less risk than common stock because the preferred stock dividends have priority over common stock dividends. Also, in a bankruptcy scenario, preferred stockholders have preference over the common stockholders. However the share prices of preferred stock tend to rise much more slowly than common stock and the dividend payments with preferred stock are generally more stable. One important risk to consider with preferred stock issuances is that they tend to have sensitivity to movements in interest rates.
While stocks have historically performed well over the long term, there’s no guarantee you’ll make money on a stock investment at any given point in time. Although a number of things can help you assess a stock, no one can predict exactly how a stock will perform in the future. Also, stock prices can change often and for many reasons. Therefore, it is very important that you carefully evaluate the risks involved in stock investing before adding stocks to your investment portfolio.
For more information on adding equities to your investment portfolio, please contact your Ocean Financial Services investment professional.