1. Stocks
When you buy a stock, you become the owner of a company share. The company is collectively owned by all shareholders. Each stock gives an owner the right for gaining of income part or assets of company.

2. Stocks are different
Stocks are usually divided according to the size of companies (capitalizations), activity of trades (stocks liquidity) or sector (oil, hi-tech companies etc.). Moreover, stocks are common and preferred. Preferred stocks bring high dividends; others are interesting to investors due to considerable growth of market value.

3. Stock cost moves after company profits
On short periods of time the conduct of stocks market depends on enthusiasm and fears, rumors and news. On long periods of time company profits mainly determine, whether the stock cost goes up, down or remains the same.

4. Stocks are a risky choice
In the 20 century, if judge on the average annual growth of stocks market, the return of stocks considerably exceeded inflation rates. Return of stocks exceeded return of market of bonds, real estate and other saving instruments. As a result, stocks is one of the best facilities for holding money for long-term aims, for example, pension savings. But one of the most risky.

5. Separate stock is not a market
A good stock can grow even then, when all market goes down, while a stock-outsider will fall even at the rapid growth of the market.

6. Excellent historical return in the past does not guarantee high results in the future
Costs of stocks are based on suppositions about the future company profits. Excellent growth in the past does not promise the same results in the future, even the best companies can goof.

7. You can not say how the stock expensive is simply looking at its price
As the stocks’ cost depends on company profits, a stock costing $100 can appear cheap, if a company waits for high profits. Also stock costing $2 can be expensive, if a company has dim prospects concerning profit.

8. Investors compare stocks’ cost with different indices to estimate the stocks’ cost
To understand whether a stock is overestimated or underestimated, investors compare its cost with a profit, income, money stream and other fundamental indices of a company. Usually compare efficiency of company with other companies from its industry. Companies of slow growing industries have other estimations, than companies of fast growing industries.

9. Correct investment portfolio of long-term growth contains stocks of strong companies from different industries
As a general rule, it is better to keep stocks from different sectors of economy. If stagnation comes in one industry, you have where to gain profit yet.

10. More correct to buy and keep good stocks, than get involved in active, short-term speculations
Except for permanent high expenses on a commission to a broker, active trade requires every minute attention after prices’ movement. It is not simple, if you work full times yet.

Common and Preferred stocks

Shareholders, holders of association common stocks, can participate in the general meeting of shareholders with the voting right to all questions under his competence, and also have a right to receive dividends, and in case of corporation liquidation – a right to receive part of his property.

Shareholders, holders of association preferred stocks, do not have voting right on the general meeting of shareholders (except for some cases). But according to preferred stocks the size of dividend should be stated in OJSC articles (or order of their determination).

As a rule, higher dividends are paid on preferred stocks, than on common stocks. Sometimes dividends are paid only on preferred stocks. Dividends are the advantage of preferred stocks.

There are some more secondary differences in the rights for holders of common and preferred stocks.

On many Russian joint-stock companies simultaneously circulate common and preferred stocks. As a rule, the costs of these stocks are different and sometimes can change even in various directions or change in one direction with different speed, that depends on short-term demand and supply of stocks in trades on a stock exchange.

Why invest in a stock?

Stocks are one of the best in the world methods to increase the personal means and create a financial capital for any private investor.

Stocks possess a remarkable feature – it is their ability to grow in price considerably in course of time, if a company, that issued stocks, conducts profitable business (it is better if dividends are paid on stocks)

Overwhelming majority of people is engaged in sale of time for money. The labor can be sold, for example, as work by hire daily on workings days from nine to six. One can work more, creep up a carrer ladder, enhance skill for the sake of salary growth. There is, however, another way to become rich, together with the main job – to compel money work for oneself, though time is spent also. Secret of wealth is to compel own money work for oneself. Strange profitable business is the key to creation of capital. For most people stocks are one of not many possibilities to participate in profitable business and make money on this.

Russian stock market is not an exception. Such markets, are named "developing market". It differs on exceptional mobility as compared to 100-year world markets – stock market experiences rapid growth of stocks. The stocks’ cost of the largest issuers increases n-fold for a short period of time. For example, for five years (2000-2004) the stocks’ cost grew 3 times on the average! Separate stocks grew much more.

Growth of stocks on long periods of time exceeds inflation rates and bank rates on holdings. No currency can be compared to growth of stocks. In course of time the cost of companies is overestimated in accordance with inflation, and growth of stocks, as a rule, regains inflation.

According to CNN/Money