“Leaders need to be optimists. Their vision is beyond the present.” -Rudy Giuliani

Stocks are often categorized by the type of objective their companies are trying to achieve. Two of the most common goals are growth and income. In addition, stocks can also be distinguished from each other based on the type of payout their offer to their investors.

Growth Stocks. Companies which offer growth stocks do not offer dividends. They are characterized by an intense and aggressive rise in the value of their stocks. This allows investors to see a growth in their original capital extremely quickly. Growth stocks usually increase quicker then the stock market itself. This works great because the company and its investors can easily reinvest their profits to increase their rate of return. Reinvestment is an alternative to dividends which other types of stocks may pay out monthly or quarterly. A good example of growth stocks are those in the tech sector. Money made from investing is pushed back into the business to finance more research and hopefully development. Growth stocks are extremely popular because of their rapid increase in price.

Income Stocks. Income stocks belong to companies which are not growing but are extremely stable. They have reached the top end of their value and continue to maintain that value. These stocks to not fluctuate with the economy or the stock market and are extremely low risk. Income stocks pay monthly dividends to it’s investors. This is a way in which investors can actually live off their investments. A good example of income stocks are REITs or real estate investment trusts. REITs offer a rate of return just under 5% yearly.

Slang Terms. There are several slang terms for stocks that all investors should know both for historical purposes and just for the fun of it.

Blue Chips is a term that refers to company stock that has a long history of producing a stable and regular increase in the value of their stock options. These companies have been through the ups and downs of the economic and stock markets – and survived. The term originates from poker where the blue chip represents the highest amount of money. Current Blue Chip companies include WalMart, Coca-Cola, and IBM.

Penny Stock is a reference to stocks which are worth less then a dollar. Most of these stocks fall under the heading of ‘speculation’. Penny stocks usually belong to companies which are new, up and comers that financial speculators believe are going to be extremely successful. They can offer a great rate of return for investors but if things do not go well, investors can lose all their money they have invested.

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