The two main types of stocks are:

• Common stocks: These offer voting rights and dividends, but in the event of liquidation, common shareholders are paid after bondholders and preferred shareholders.
• Preferred stocks: These do not come with voting rights but have a higher claim on assets and earnings than common shares. Preferred shareholders receive dividends before common shareholders.

Investments can be broadly categorized into:

• Stocks: Shares in individual companies.
• Bonds: Loans made to corporations or governments.
• Mutual Funds/ETFs: Pooled investments in a mix of stocks, bonds, and other securities.
• Real Estate: Investment in property for rental income or capital appreciation.
• Commodities: Physical goods like gold, oil, or agricultural products.
• Cryptocurrencies: Digital assets based on blockchain technology.

Financial planning is the process of managing your finances to achieve your life goals. It helps ensure you have enough money for expenses, emergencies, and future needs, such as retirement or education.

Key components include:

• Budgeting and cash flow management
• Debt management
• Insurance planning (health, life, etc.)
• Investment planning and asset allocation
• Tax planning
• Retirement planning

Diversification involves spreading investments across different asset classes, sectors, or regions to reduce risk. It is important because it helps minimize the impact of poor performance in any single investment.

Asset allocation is the process of distributing investments among different asset categories, such as stocks, bonds, and cash, based on one's risk tolerance, time horizon, and financial goals.

Risk tolerance refers to an investor's ability to endure market volatility and potential losses. It influences the choice of investments; higher risk tolerance may lead to a greater proportion of stocks, while lower risk tolerance may lead to more bonds and cash equivalents.