Sam quickly found that Anna's knowledge of investments was slim, so he explained stocks to her. Stocks in a company represent a portion of ownership, called shares, that are bought and sold through an exchange. Both represent ownership in a company, but common stock holders have company voting rights and common stock may pay dividends. Preferred stock has no voting rights, but pays regular dividends at a pre-set rate that does not vary with stock price or company performance. Sam explained more of the stock-market jargon.
Growth stocks are in companies whose stock price appreciates with time.
Value stocks are in companies whose stock price is abnormally low, but the fundamentals of the company are good. Growth and value stocks may or may not pay dividends. Income stocks pay higher dividends, so the stock price is not so volatile. Anna was overwhelmed by all this information, but Sam assured her that over time she would become comfortable with the terminology and concepts. Anna's primary goals are saving for retirement and college education for her children.