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By Emily Roberts
For the Financial Independence Hub
Following a challenging year for us all, we are confident that those reading this and beyond are more than happy to see the back of 2020. As we make our way further into 2021, the pandemic’s impacts are beginning to show themselves more, and we can see the different ways that the pandemic changed our lives in some way or another.
Financially, the last year has been one of the toughest that many of us have ever faced. A large majority of the world population experienced the economic crash of 2008 but have stated that the last year has been similar in some elements but drastically different in others. It is no surprise that experts have estimated that the pandemic’s financial impact across the globe is set to be much worse than that felt back in 2008.
As a result of this, there is little surprise that people are searching for ways that they can be more economic themselves, and how they can improve their current situation. We are seeing more and more people monetizing on their existing skills in every direction, creating a small, online business selling some type of arts and crafts or baked goods.
While these are certainly effective ways of boosting your income following a set-back, this is not the only avenue available to those searching for a side hustle. With an increased interest in the world of cryptocurrency as of late, and with a 350% increase in how many Google searches have been made into Bitcoin, there undoubtedly appears to be an interest in investing our money.
If you are interested in finding out more about investing your money moving forward and the different stock types to consider when exploring this world, you are in luck! Detailed below is a helpful list of the best stock types to consider in 2021. Read on for more.
Before deciding to invest
Particularly when exchanging money, you want to make sure that you have put some thought into this. The last thing that you want to do when attempting to boost your income is to put yourself into any sort of financial difficulty.
Those who are clued up on all thing’s stocks are probably aware that there is risk involved in investing in stocks. But for those who are not, this is one thing that is well worth considering before jumping into this world.
By ensuring that you correctly understand the ins and outs of what you are getting yourself into, you can rest assured that you will be moving money around in a safe manner.
It is worth noting that investing in stocks takes some time and patience; you will not see the results overnight, so it is worth monitoring over time. On that note, let’s get to the main event: what types of stock exist.
Different Stock Types
- Common Stock: As the name here suggests, this is the most common type of stock that exists and which you can invest in. Common stock is an ideal stepping-stone into the world of investment and is suitable for those who are first starting out on their investment journey and building up a portfolio. When you invest in a common stock, you own a share in the stock and in the company’s profit as well. Those who choose to invest in a company through common stock can also expect to get the ability to vote on the company policy and anything else of importance that requires shareholder’s input.
- Preferred Stock: This type of stock is often compared to bonds. Unlike common stock, preferred stock pays investors a fixed dividend, whereas the common stock offers investors the opportunity to earn dividends, but these are not guaranteed. Preferred stock is an ideal choice for those looking to invest in something while prioritizing income rather than any sort of long-term growth. Much like that of common stock, those who invest in a company’s preferred stock can vote on matters involving shareholders but are also given more preferential treatment. What’s more, if a company is to go into liquidation or declare bankruptcy, those who own preferred stock are returned their dividends before those who have common stock.
- Mining Stocks: Unlike other aspects of the investment world, this may well be a term that not many people are aware of. That said, these are also stocks worth investing in during 2021. More so when wanting to boost your income. Much like our other suggestions, it is advised that those interested in investing into these particular stocks do adequate research levels first. Mining stocks have multiple elements to them, and these are known as either major or junior mining stocks. Major mining stocks are known to work in a similar way to that of blue-chip stocks. On the other hand, junior mining stocks are akin to penny stocks. To learn more about mining stocks and how you can go about investing into this particular type of stock in 2021, check out the guide created by Wall St Now on their website.
- Blue Chip Stock: Following its brief mention previously, we thought it best to explain further what we mean by Blue Chip Stock and why it is one of the best stocks to invest in as we head further into 2021. Blue Chip Stock investors can expect to experience relatively low risks regarding their investment into a business. Companies that allow the opportunity to invest in Blue Chip Stocks are generally considered leaders in their industry. With strong reputations regarding products and services, those who choose to invest in this particular stock can rest assured that they will receive some sort of pay-out at some point.
- Cyclical Stocks: Another term those outside the investment world may be unfamiliar with, but another excellent type of stock worth investing in when wanting to make some profit in 2021. Cyclical stock is also known as equity stock and is generally used in businesses and companies that are manufacturing certain goods; this can include cars, houses, and other equipment. Generally speaking, we pay for necessary goods like food and drink on at least a weekly basis. We don’t tend to put a second thought into these purchases, and it is something that we need and therefore pay for often. Cyclical stocks rise and fall in value based on the ups and downs that come with being a business and any external influence. Think of economic crises – much like what we have seen in the last year – as well as economic booms. To make a profit through cyclicals, you would need to purchase a stock in a company during a time when the price is at its lowest. This could be during an economic crisis, so it is certainly worth considering at a time such as the present. To make a profit, simply sit with your investment and be patient until a time when the price has risen, during an economic boom. When investing into cyclical stocks, one thing that should be considered is that during times of recession, the investment you have made could be regarded as worthless. So, make sure to do your research before making the jump.
- Defensive Stocks: While on the topic of investment during the recession, our attention turns to the world of Defensive Stocks. Another suggestion for those looking to invest in 2021 is an ideal suggestion on the off chance that we enter another recession in the future. Continue Reading…
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