Income stocks - pay unusually large dividends that can be used to generate income without selling the stock. However, the price of income stocks generally does not rise very quickly.

Blue chip stocks - usually pay small but regular dividends and maintain a fairly steady price throughout market ups and downs. Very solid and reliable companies with long histories of consistent growth and stability issue blue chip stocks.

Growth stocks - normally pay little or no dividend because the company needs all of its earnings to finance expansion. Growth stocks are issued by young, entrepreneurial companies that are experiencing a faster rate of growth than their general industries. Because these companies have no proven track record, growth stocks are riskier than other types of stocks but also offer more appreciation potential.

Cyclical stocks - tend to go down in price during recessionary periods and up during economic booms. Companies in industries that are affected by general economic trends (such as automobile, heavy machinery and home building) issue cyclical stocks.

Defensive stocks - are the opposite of cyclical stocks. Defensive stocks, issued by companies producing staples such as food, beverages, drugs, and insurance, typically maintain their value during recessionary periods.