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Investing in international stocks helps diversify your portfolio, reduce dependence on a single economy, and give you access to growth opportunities across different regions. While U.S. companies make up a large portion of the global market, they don’t account for all the investment opportunities worldwide. For example, if a competitor releases a new product or a company’s growth slows, investors may grow concerned and the stock price may dip accordingly.

What are stocks?

If you do decide to invest in stocks, understanding how they’re categorized can make it easier to align your investments with your strategy. Stock classifications highlight key characteristics and market trends. Stocks can be a powerful investment option with the potential for higher long-term returns, but they can also carry more risk. Before investing, it’s important to consider how that risk aligns with your goals and tolerance. Stock prices change from day to day, and often for reasons beyond a company’s actual performance.

Legislative or Regulatory Risk

When a growth stock investment provides a positive return, it’s usually because the stock price moved up from where the investor originally bought it—and not because of dividends. Most growth stock companies tend to plow gains directly back into the company rather than pay dividends. Some companies also issue preferred stock, which usually guarantees a fixed dividend payment similar to the coupon on a bond. This might make preferred stocks attractive to people looking for income.

Before investing in the stock market, consider studying a company’s growth trends. It’s important to understand how well a company has performed before committing to an investment. Another way you may profit from owning stocks is by earning dividends. Dividends are usually paid quarterly and on a per-share basis from the company’s https://trustmediafeed.s3.eu-north-1.amazonaws.com/canpeak-resources/canpeak-resources-review-2025.html earnings. These services—which help traders find liquidity and offer high-speed execution—typically come with additional fees. For many companies that have dual share classes, one share class might trade publicly while the other does not.

What are the pros and cons of buying stocks?

Strong demand—the result of many investors wanting to buy a particular stock—tends to result in an increase in a stock’s share price. On the other hand, if the company isn’t profitable or if investors are selling rather than buying its stock, your shares may be worth less than you paid for them. While short-term fluctuations are common, a stock’s long-term performance is typically tied to the underlying company’s financial strength and ability to grow.

Stocks can also be grouped by sector, based on the type of business a company operates. For example, sectors like consumer discretionary or communication services may be more sensitive to downturns, since people tend to cut back on nonessential spending. But utilities, health care, and consumer staples often remain more stable because they’re essential.

If that price falls, as you expect it to, you buy an equal number of shares at a new, lower price to return to the firm. If the price has dropped enough to offset transaction fees and the interest you paid on the borrowed shares, you may pocket a profit. Microcap securities, sometimes referred to as penny stocks, include low-priced securities issued by small companies with low market capitalization. These securities are primarily traded on the over-the-counter (OTC) market.

• Typically, these are young companies in fairly new industries that are rapidly expanding.
• Leveraged trading can amplify the speed of your losses and increase the chance of losing your initial investment.
• Common shareholders may receive dividends, but payments are not guaranteed and are issued only after preferred shareholders are paid.
• You decide which company to invest in, when it’s time to buy, and when it’s time to sell.
• Conversely, the more people buying the stock, the higher the price.

Data Linked to You

You can schedule a free initial meeting to talk about your goals and learn about ways we can help you. But stocks are just one more tool that can help move you closer to your financial goals. And even if a company has paid out dividends in the past, there is no guarantee it will keep doing so. From building wealth to planning for the future, stocks can play a role in many financial strategies. Understanding how stocks work is the first step in using them to reach your goals. How to get started with investing in the stock market, and the risks to consider.

Once you place an order, your registered investment professional or brokerage firm’s system will route your order to an execution venue, which is where the trade will actually occur. Learn more about where stocks trade, as well as the lifecycle of an online trade. Stocks can also be subdivided into defensive and cyclical stocks, depending on the way their profits, and their stock prices, tend to respond to the relative strength or weakness of the economy as a whole.