Actions: Common or Preferred? Here is the debate that every investor must resolve.

Did you know that the S&P U.S. Preferred Stock Index fell 18.05% over five years, while the S&P 500 rose 57.60%? This brutal gap summarizes everything you need to know about the two stock investment strategies.

The Fundamental Dilemma: Vote vs. Cash Out

Companies issue two types of shares, and each one offers you a different deal.

Common Actions:

• Vote on corporate decisions
• Variable dividends ( depend on how the company performs )
• Greater capital growth potential
• High liquidity, high risks
• Ideal if you are 20-40 years old and can withstand turbulence

Preferred Shares:

• Without voting rights (you are a shareholder, but without power)
• Fixed or quasi-fixed dividends (predictable)
• Priority in liquidation ( you recover your money first if the company goes bankrupt )
• Limited liquidity, low risk
• Ideal if you are near retirement or want stable income

Why Preferred Shares Fell: The Trap of Interest Rates

Preferred stocks function like hybrid bonds. When interest rates rise, investors prefer safer real bonds ( and abandon the preferred ones. This explains the 18% drop while the S&P 500 soared.

The Real Strategy

If you are young: Common actions )risk tolerance, long time horizon(.

If you are conservative or close to retirement: Preferred )predictable cash flow, capital protection(.

The smart move: Combine both. Preferred shares stabilize your portfolio when common shares demoralize, and vice versa.

How to Get Started

1. Choose a regulated broker
2. Open an account and deposit funds
3. Analyze the company ) fundamentals, sector, competition (
4. Execute market or limit order
5. Diversify: don't put everything into one type
6. Review periodically

Bonus: You can trade CFDs if your broker allows it, without actually owning the shares.

The Number That Says It All

The S&P U.S. Preferred Stock Index represents 71% of the preferred market in the U.S. Its performance versus the S&P 500 reflects an uncomfortable truth: during times of rising rates, preferreds suffer. But when the cycle changes and rates fall, they come out ahead.

Conclusion: It is not “common vs. preferred”. It is “risk vs. security”. Choose according to where you are in your financial life.