The key takeaway is that investing in preferred stocks requires a thorough understanding of the company’s financial health and stability, alongside a clear strategy to purchase these stocks via a brokerage account or exchange-traded funds (ETFs) that specifically focus on preferred stocks.
Now, let’s say you’ve been making your money work for you in the common stocks game. But, you heard about these ‘preferred stocks’ and thought, “Hey, they got ‘preferred’ in the name. They gotta be something special, right?” And you ain’t wrong, buddy!
Think of preferred stocks like that VIP ticket to a concert. Yeah, you could chill with the rest of the crowd, but wouldn’t you prefer (see what I did there?) to have a guaranteed seat, maybe even with a little extra something-something? That’s what preferred stocks are all about. They’re the VIP tickets of the stock world – you get your dividends before the common stockholders, and if the company ever goes belly up, you’re in line for the assets before those common stockholders too.
So, you’re asking, “Big Willy, how do I get my hands on these preferred stocks?” Well, first thing you gotta do is find a brokerage account. You might already have one if you’ve been dabbling in those common stocks. But if you haven’t, don’t sweat it. There’s plenty of them out there. Do your research, find one that suits your needs, and set that account up.
Then you gotta find yourself the right preferred stocks to buy. This is where you need to take a little time, do a little homework. Read up on the company, check out their financial health. You want to be sure the company’s stable enough to pay those dividends. Also, look at the dividend rate, how much you’ll get paid for each share you own.
Finally, you place your order through your brokerage account. Decide how many shares you want to buy and what type you want – market order, limit order, that kinda thing. And voila! You’re in the preferred stocks game.
But hey, maybe you’re thinking, “That sounds like a lot of work, Big Willy. Isn’t there an easier way?” Well, there are these things called Exchange-Traded Funds or ETFs. Some of these are focused on preferred stocks, so you could just buy shares of those ETFs and get exposure to a whole bunch of preferred stocks at once. It’s like buying a sampler platter instead of picking just one appetizer.
Just remember, whether you’re buying individual preferred stocks or going for the ETFs, you gotta do your homework, know what you’re buying, and be cool with the risks. ‘Cause just like with any investment, there’s no guarantee of success. But hey, you’ve got this, champ!