What Types of Stocks Are Considered Real Estate Investments?
Stocks are all the stocks in which ownership of a company is divided up. In American English, the stocks are collectively referred to as “stock.” Each stock has a fixed rate of return, also called the dividend. A single share of stock actually represents fractional ownership in proportion to the amount of shares outstanding. This is unlike the case of property where the value of the property is defined by its worth at purchase, while the value of stock is determined by the price per share or alternatively by the volume of trading in that particular security.
Market capitalization, also referred to as the market price of stock, is the value per share multiplied by the current outstanding. A company’s market capitalization is calculated by dividing the market price per share times the outstanding. This gives us the current market capitalization of a company. The companies with the highest market caps are also the strongest, with the exception of oil and gas companies.
Bonds and mutual funds generally deal exclusively with equities and have no relation to stocks. They are not designed for the raising of capital. The raising of equity is a different story altogether, as it relates to the ability of a company to pay its bills.
An investment portfolio that focuses on stocks alone will not provide support for short-term needs, unlike bonds. A stock portfolio will usually have one to two different stocks in each asset class. It is important to understand that the stocks you own are different stocks. For example, your long-term investment portfolio may consist of both blue-chip stocks and safe-haven stocks.
You should be aware that investing in stocks means that you are buying ownership in the actual company. This means you should know how much of that company’s equity is held by each individual stock. Sometimes companies can be controlled by a single shareholder, but that shareholder doesn’t necessarily control the company itself. For this reason, when purchasing stocks in a publicly traded company, it is wise to know the number of outstanding shares of each class. That information will allow you to purchase additional shares through an appropriate broker.
In general, people buy stocks for different reasons. Some people are interested in owning stocks because they want to make money from them through dividends. Other people buy stocks so that they can purchase companies that issue stock for their own funds. And, still other people buy stocks as an investment, which means that they anticipate that the value of those stocks will rise over time.