As we mentioned in previous article, we know that our government only represents about 30 and many of us do not have one. It is up to individuals to invest wisely short and long term in order to make up for the short fall if he or she would like to live comfortably after retirement without giving up some retirement plans. In this article, we will discuss the characteristics of common and preferred shares.

Common and prefer share holders are corporations owners who provide capital for the business. while common shareholders take greater risk, and may gain or lose more than preferred shareholders, therefore the returns and dividends are higher than for the preferred shares.

1. Characteristics of common shares

a) A vote at annual meetings and receive regular financial statements of the company.

b) An opportunity to share in the profit of the company, capital gains (losses) and dividends because buying common stock represents a decision to give up some measure of safety in favor of prospects for greater return. If the company does poorly, some or all of the investment of common share holder can be lost.

c)common share holders also can claim on the company's assets, in case of dissolution.

d) Sometimes common shareholders are offered privileges to buy additional shares directly from the company, often bellowing market price without paying commission and the rights of either exercising them to buy more shares or of selling them on the market. This right usually is expired in 3 weeks.

e) The company might also issue common share with warrants to attract new buyers. Warrants allow the owner to buy shares of the issuing company at a set price, usually below the going price rate within a specified time period and they can be may be detached and sold separately.

f) Common may be split by the company by exchanging each share for several shares.

2. Characteristics of prefer shares

Preferred shares issued by company also representing limited ownership in a corporation/company. Some investors choose preferred shares over common shares because of their lower risk and greater assurance of regular income known as dividends.

a) Part ownership in the company with no voting right.

b) A set dividend rate.

c) Most preferred shares are cumulative. If the company does not pay the dividends due each quarter, the unpaid dividends accumulated in arrears and must be paid before any common shares dividends are paid. Usually, unpaid dividends usually causes the market price of the shares to drop.

d) some preferred shares are redeemable giving the issuer the right to redeem them at a future date.

e) Some prefer shares are convertible giving the investor the option to convert the shares into other stock of the company at a specified price and within a certain period.

I hope this information will help. If you need more information, you can read the complete series of the above subject at my home page: