Investing in shares is one of the most popular ways to grow your money, though shares are not all the same. When you purchase a share of a company, you become a part of the company. If you are just starting with stocks or want to know more, learning about the different share types helps you invest more wisely. Before this, you need to understand what are different types of shares are.
Let’s check different types of shares
A) Equity Shares
Equity shares are the shares found most often in the stock market. If you buy an equity share, you share ownership of the company. So, a successful company means your investment value rises.
- There’s a possibility you could be given some of the company’s profits, known as a dividend, but it isn’t always given.
- Equity shareholders have the ability to vote on important decisions of the company.
- The stock price of these shares may increase or decrease according to the company’s progress and what traders believe about the company.
Equity shares are most appropriate for those willing to risk a little for the future growth of their investments.
B) Preference Shares
The way preference shares operate is not the same as regular shares. Anyone who owns these shares will be among the first to receive dividends.
In other words, they receive their compensation before equity shareholders are paid. When a company closes down, preference shareholders get paid out their money first.
Still, most people who own preference shares do not get to vote. Since the dividend payments are normally fixed, such shares are favoured by people seeking steady income over major profits. Although they are usually safer, they normally deliver less growth over the years.
Some Other Forms In Which Shares Are Classified
A) Dividend Shares
Such companies usually give a portion of their earnings to investors. Because they are reliable and risk-averse, they attract people who depend on steady income.
B) Blue-Chip Shares
Investors who choose companies like Reliance or Infosys find that blue-chip shares give them steady earnings and allow them to target the long term.
C) Growth Shares
These enterprises are among the fastest-growing companies, and they use their profits to grow further. They are considered riskier but tend to give higher returns to those aiming for quick growth.
Final Thoughts
Understanding share types allows you to choose where to invest better. Most companies begin by being privately held, and that is where investors can find undervalued, growing companies to start their investments. With Stockify, you can get unlisted shares in OYO, PharmEasy and more— before they are publicly listed on the stock exchange. So make the most of this opportunity now.