If the idea of investing in the stock exchange frightens you, you are not alone. People with very limited experience in stock investing are either terrified by scary stories of the typical investor losing 50% of their portfolio valuefor example, in the two bearish market that have currently taken place in this onfeetnation.com/profiles/blogs/saving-and-investing-sec-gov millennium or are seduced by "hot pointers" that bear the guarantee of huge rewards but seldom pay off.

The reality is that investing in the stock market carries risk, but when approached in a disciplined way, it is among the most effective ways to develop one's net worth. While the value of one's house normally accounts for most of the net worth of the average specific, the majority of the upscale and very rich generally have the bulk of their wealth purchased stocks.

Key Takeaways Stocks, or shares of a company, represent ownership equity in the company, which offer shareholders voting rights as well as a recurring claim on business revenues in the kind of capital gains and dividends. Stock markets are where specific and institutional investors come together to purchase and sell shares in a public venue.

For example, an individual or entity that owns 100,000 shares of a company with one million outstanding shares would have a 10% ownership stake in it. Most business have exceptional shares that face the millions or billions. Common and Preferred Stock While there are two primary kinds of stockcommon and chosenthe term "equities" is associated with common shares, as their combined market price and trading volumes are numerous magnitudes larger than that of preferred shares.

Preferred shares are so called because they have preference over the typical shares in a business to receive dividends as well as assets in case of a liquidation. Common stock can be further classified in regards to their voting rights. While the fundamental premise of common shares is that they need to have equivalent ballot rightsone vote per share heldsome companies have dual or numerous classes of stock with various ballot rights connected to each class.