How to invest in stocks
by Herman Lau

Stocks, which are also known as shares, are portions of companies that people can buy, and therefore own part of the company. There are two different types of shares: preferred shares and common shares. When you invest in common shares, there is a higher risk of losing part or all of your investment that you have put into the company if it goes bankrupt. Because creditors, bond holders and preferred shared holders have a higher rank than the common shareholders, they will get the first opportunity to get some of the money they have put in if the company goes out of business.

Investors who have preferred shares have a higher standing than the ones with common shares, but still have to get in line behind the creditors when it comes to how much of the company they own, or getting paid if the company goes out of business. In addition to having more of a say in the company decisions than those who have common shares, investors who have preferred shares can also look forward to higher dividends.

There are two ways to purchase stocks - investors can either use a brokerage, or buy their stocks through Direct Investment Plans or Dividend Reinvestment plans.

If you decide to purchase stocks through a brokerage, you can go one of two ways. If you are going to trust the experts to do the right thing, and leave it in their hands, then you should go with the services of a full service brokerage. But, if money is a consideration in this tough recession we are having and you don't want to spend the money on a full service brokerage, you can go with a discount brokerage. Even though discount brokerages cost less than full service brokerages, they don't offer the same amount of assistance that the full service brokerages do, which I prefer if you’ve just begun to invest.

If you decide to invest using a Direct Investment Plan or a Dividend Reinvestment Plan, check to make that the company that you are interested in investing in offers such plans because not all of the companies do

Some hints when looking for stocks in this tough economy is try looking into the energy sector as Obama plans to invest in clean and efficient energy which will save American families and businesses billions of dollars, or biotechnology. Some examples are MDU Resources Group Inc (MDU), AirShares EU Carbon Allowances Fund (ASO), and iPath Global Carbon ETN (GRN). Also there are plans for huge medical reform where all medical records would be computerized to eliminate a lot of error to help save lives and lower the rising costs of medical care. Some examples would be Gilead (GLD), Biomarin  (BMRN), or China Sky One Medical (CSKI).

But just don’t look into only these stocks or sectors as Obama’s economic plan is implemented and consumer confidence/spending goes up there would be lots of growth in many other companies, which you have to look out for. Well happy investing and make some money in this tough, yet changing economy.