Stocks, also known as shares or equities, are a type of financial asset that represents a portion of ownership in a company, specifically a joint-stock company. When you buy a stock, you become a shareholder, participating in the stock’s performance and receiving a stake in the company’s profits in the form of dividends. The share price is subject to fluctuations and is influenced both by the company’s performance or profitability and by general market sentiment.
In an Initial Public Offering (IPO), securities are issued for the first time. Companies seeking capital sell their own shares to investors offering capital. The reasons for a company to offer stocks are varied, including raising capital for growth and valuing the company.
Stocks can then be traded via stock exchanges, online brokers, financial advisors, or banks, among others.
owadays, stock trading platforms, also called online brokers, are gaining more and more popularity. This is mainly due to the fact that trading platforms such as the BISON app are easily accessible, often associated with low costs, and user-friendly.
There are two main types of stocks:
These are the most common type of stocks purchased by investors. They come with voting rights at shareholders’ meetings and offer the potential for dividends.
These stocks come with a higher claim on a company’s earnings and assets. This means that preferred shareholders will receive dividends before common stockholders. However, preferred stocks usually do not come with voting rights.
Although they are different asset classes, both stocks and cryptocurrencies are globally tradeable and are considered widely popular investment instruments. Both cryptocurrencies and stocks can be used by investors to build wealth. However, investing in stocks differs significantly from investing in cryptocurrencies.
Here’s a breakdown of their key differences:
Both stock and crypto trading involve risks. So when making investment decisions, it’s essential to invest only what you can afford to lose. Risks to consider include market risk, liquidity risk, and currency risk.
Corporate Finance Institute (2022) “Cryptocurrency vs Stocks,” Corporate Finance Institute. Available at: https://corporatefinanceinstitute.com/resources/cryptocurrency/cryptocurrency-vs-stocks/, last accessed on 06.09.2023.
Hayes, A. (2023) “Stocks: What They Are, Main Types, How They Differ From Bonds,” Investopedia. Available at: https://www.investopedia.com/terms/s/stock.asp., last accessed on 06.09.2023.
Modderman, G. (2022) “Cryptocurrency vs. Stocks: Key differences explained,” Cointelegraph. Available at: https://cointelegraph.com/explained/cryptocurrency-vs-stocks-key-differences-explained, last accessed on 06.09.2023.
Deutsche Börse Group (n.d.) “IPO”. Available at: https://deutsche-boerse.com/dbg-de/unternehmen/wissen/boersenlexikon/boersenlexikon-article/IPO-244786#:~:text=IPO%20Abk%C3%BCrzung%20f%C3%BCr%20%E2%80%9EInitial%20Public,weltweit%20erstmalig%20an%20einer%20B%C3%B6rse. , last accessed on 06.09.2023.
The content of this article is for informational purposes only and does not constitute financial, investment, and/or trading advice. We strongly recommend that you conduct the necessary research before making an investment, and/or trading decision. Please note that past performance does not guarantee future results.
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