Types of Assets & Funds: Equity Securities / Common Trust Funds


By buying stocks or shares of a company, an investor signifies ownership in a corporation and represents a claim on part of the corporation’s assets and earnings. Ownership is determined by the number of shares a person owns relative to the number of outstanding shares.

i.e  Company has 1000 shares outstanding stocks

     100 of that shares was bought

   = 10% of the company and are entitled to that same percentage of its assets

 

These shares are classified into two:

  1. Common Stocks
  2. Preferred Stocks

 

Common Stocks – a share of the corporation’s profit and at the same time a voting power in shareholder elections. You get voting rights.

Preferred Stock – no voting rights but you are guaranteed priority in the payment of dividends.

Remember that investing in stocks is not risk-free but it can be regulated. Being stockholders of a company means that the investor is ready to accept the risk of his/her assets no matter what condition happens in the market.

The Common Trust Fund however is a form of collective investment maintained by a bank and whose performance is monitored by the BSP (Bangko Sentral ng Pilipinas) Here, the investors sells and buys back his/her units of participation at net asset value.

You may get to read more about the Types of Assets and Funds in the following posts.

 

 

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2 thoughts on “Types of Assets & Funds: Equity Securities / Common Trust Funds

  1. Burn Gutierrez says:

    How about organizing a “run” to push for the Department of Education/CHED to include personal finance and investments as part of schools’ mandatory curricula from kindergarten to college?

    Hope to connect with you soon. Happy new year! 🙂

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