By Delta Jones-Walker, Gary Crusader
She is one of the most celebrated figures in the world. She gives life, and in most cases, puts the needs of others before her own. We affectionately call her “Mom,” “Mother,” “Mommy,” “Mama” or even “Madear!”
The day is almost here when we will all pause to salute mothers with gifts, flowers, dinner and the like. Why not switch up the Mother’s Day tradition this year and buy mom some stock? Yes, I said stock! You can go to dinner anytime, flowers will soon die and the perfume runs out, but an investment in stock can possibly yield big dividends over time.
But before you make a stock purchase, let’s go over the basics. A stock is a share in the ownership of a company and represents a claim on the company’s assets and earnings. The more stock you acquire, the greater your stake becomes in the company. Additionally, owning stock gives you the right to vote in shareholder meetings and receive dividends, which are company profits.
There are two types of stock a company can issue — common stock and preferred stock. Remember, with any type of investment comes risks. Common stocks tend to yield higher returns, however, higher returns come with a cost. There is always the chance that a company can underperform or even go out of business causing one to lose money.
If a company goes bankrupt and liquidates, the common shareholders will not receive money until the creditors, bondholders and preferred shareholders are paid.
Preferred stock functions similarly to bonds, and usually doesn’t come with voting rights. With preferred stocks, investors are usually guaranteed a fixed dividend in perpetuity. This is different from common stocks, which have variable dividends that are declared by the board of directors and are never guaranteed.
This all may sound a bit complicated at first, but fortunately, your financial advisor can walk you through the process and even help you get started building a stock portfolio for you and mom.
The best news is that you don’t need a lot of money to start investing. Following the stock market may be a great hobby to start with mom while potentially filling her pockets and yours!
If you want to learn more about stock investments, speak with a financial advisor. Happy Mother’s Day to all the moms and happy investing!
Note: Investing involves risk including potential loss of principal.
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