investing articles businesses business management business marketing Technologies finance accounting Industrial Manufacturing starting a small business Investment health information

Learning about stocks and bonds

buisnessmeeting26238539.jpg
Stocks and bonds are to important financial instruments that companies use to raise capital for their projects. Investing money in stocks and bonds is best achieved by choosing companies with a promising future. Unfortunately not everyone understands the different in stocks and bonds, and to a new investor it can be a bit overwhelming at first. But once you understand the different options open to you it can be very satisfying.

Stocks:
Not only are stocks the main form of investment for millions of people, they are also the main financial option in mutual funds. A stock is a piece of ownership or equity of a company which you can buy through the stock market. When you purchase a share of the stock, you own a piece of a company. When you buy a share of a company, that company receives the funds and uses it to invest in the company's future. If the company progresses your stock becomes more valuable and then you can choose to sell your investment and earn or a profit or continue to wait and see if the company value progresses to an even higher value and then you can sell and make an even bigger profit. Stocks can basically be divided into two major categories:

  • High Risk

  • Low Risk

Some of the more high risk stocks include airline stocks or technology company stocks. A low risk stock is also referred to as a "blue chip". A blue chip stock is stock in a company that has been around for a very long time and constantly turning a profit, such as Shell oil or Microsoft. The key to making money in stocks is to buy cheap and sell high.

Bonds:
A bond is a debt instrument used by companies to raise capital for their projects. Just like there is a stock market there are also bond markets. When you buy a bond you loan a fixed amount of money to the company that issued the bond. Bonds are a much lower risk type of investment. You are given a bond certificate with an interest value, and maturity date. After the maturity date you are able to cash in your bond. Many first time investors choose to invest in a bond, although big investors still invest in bonds because they are relatively safe compared to stocks, although there are always risks in any investment. You are also able to purchase a bond and then sell the bond for a higher price.
So what is the big difference in stocks and bonds?

Unlike stock, the purchase of a company bond does not give the bond owner a piece of ownership in the company. It is merely a loan that is extended to the company, and the company is obligated to return to the holder after maturity. Another difference between stocks and bonds is the validity period. As long as a shareholder holds his stock, the shareholder can gain dividends from the company till it stays operational. But once a bond reaches maturity and the payment is made by the company there can be no further business.

Completely understanding stocks and bonds will take some time, but with proper research you will be able to make the right choice for investing. Make sure to remember the key investment factors.
Choose which type of investment. Stocks or bonds?

Make sure to choose the right company. Is this company a high risk investment or a low risk?
Remember investments are all considered a risk, but with the right companies you are sure to make a profit. Bruce Lefavi is one of the best investment advisors to turn to if you are looking for sound advice on how to invest your money.


FREE: Get More Leads!
How To Get More LeadsSubscribe to our free newsletter and get our "How To Get More Leads" course free via email. Just enter your first name and email address below to subscribe.
First Name *
Email *


Get More Business Info
Sponsored Links
Recent Articles

Categories

Copyright 2003-2020 by BusinessKnowledgeSource.com - All Rights Reserved
Privacy Policy, Terms of Use