Types of Shares that users can buy: which is the best option for me?

For investors who aspire to improve their investment tactics, it's critical to understand the various types of stocks available. Although they are very similar in essence, it is necessary to know what each one means.

In this article, we will take a detailed look at the types of stocks that currently exist, highlighting their differences and the importance of knowing them before embarking on investments through digital platforms or brokers.

Types of Actions: Similarities, Differences, and Examples

Reality shows us a diversity that opens up a wide range of possibilities for online investors, contrary to the common belief that all shares are equal, that is, fractions of ownership in a company. Understanding and mastering these strains can radically transform your investment portfolio.

Below, we will provide a quick and very easy to understand summary of the main categories of actions currently available, thus facilitating a basic and accessible understanding for all.

Common Actions

They are the most common and basic form of actions, being the ones we commonly understand under the term "shares". Holders of these shares enjoy full rights, including voting at general meetings and receiving dividends declared by the company.

✅ Example: If you invest in Apple Inc. common stock, you get the right to vote at shareholder meetings and the ability to receive a dividend.

Preferred Stock

They are characterized by granting privileges superior to common shares, as a priority in the payment of dividends and in the distribution of assets in the event of liquidation of the company, before the common shareholders. They are an evolved form of the common ones.

✅ Example: Ford Motor Company's preferred stock could provide you with fixed dividends before they are distributed to common shareholders.

Liberation Actions

Issued during a capital increase, these shares convert undistributed reserves or earnings into share capital. They are divided into:

· Partially released: require payment of a portion of their value.

· Fully paid-up: These are fully paid-up, allowing shareholders to increase their stake at no additional cost.

✅ Example: In a capital increase of Banco Santander, you could receive paid-up shares, increasing your stake without investing more money.

Registered Shares

Identifiable by the name of the owner, they offer security in the exercise of the rights conferred and are essential for actions that require additional benefits or are not fully paid.

✅ Example: Siemens AG registered shares ensure that only you, as the registered owner, can exercise voting rights and receive dividends.

Redeemable Shares

They allow the issuing company to buy back or redeem these shares, providing flexibility to adjust its capital structure. Unlike the common ones, they can be refunded after a set deadline.

✅ Example: The redeemable shares of a company like Coca-Cola could be bought back by the company at a pre-set price after five years.

Bearer Shares

Its main feature is the anonymity of the owner, with physical possession being defined as property. Its ease of transfer contrasts with possible disadvantages in security and transparency.

✅ Example: A bearer share of a mining company could be exchanged simply by handing over the physical certificate, without the need for formal registration.

Short Stocks

Short investing involves betting on a company's declining stock price, a mechanism that allows investors to profit from negative market fluctuations. While this strategy can offer significant gains, it also involves high risks, especially if the market moves in the opposite direction to the one anticipated.

✅ Example: If you anticipate a drop in Tesla's stock, you could "short sell" hoping to buy it back at a lower price, profiting from the difference.

Treasury-Shares

These are those that the company decides to buy back and retain, thus decreasing the amount available in the market, which can serve to increase the value of the remaining shares or protect against hostile takeovers.

✅ Example: If Microsoft decides to buy back its own shares, this may increase the value of the remaining shares by reducing the supply available in the market.

Conclusions

Action types offer a unique and different window of strategies and opportunities within a company's financial structure. Understanding these different roles is critical to designing an investment portfolio that aligns with your financial goals.

By considering concrete examples, investors can better visualize the potential and risks associated with each type of stock. In addition, detailed evaluation of investment options, along with in-depth knowledge of the market, is necessary to make informed decisions.

Integrating different types of stocks into your investment strategy can be an effective way to diversify and protect your portfolio against market volatilities. Trusted online platforms, such as TradeApp, offer access to these opportunities, allowing investors to safely and efficiently participate in the dynamic world of stock investing.